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Understanding the Key Growth Drivers for Router Sales

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Growth in mobile data traffic

A rise in the penetration of mobile devices such as smartphones and tablets will likely drive up the demand for mobile data. Telecom companies, consequently, may look to upgrade their networks to support and monetize traffic growth. Escalating mobile data traffic will have a positive impact on router sales.

According to the Cisco Systems’ (CSCO) VNI (Visual Networking Index) Global Mobile Data Traffic Forecast released in February 2016, the surge in mobile users, smart devices, and machine-to-machine connections is expected to increase mobile data traffic eightfold by 2020. Cisco also expects mobile video to have the highest growth rate of any mobile application.

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The Global Data Traffic report states that “a new generation of robust, high-performance wireless networks will be critical in facilitating this growth, and 5G networks will be instrumental in helping the industry develop a new economic model for offering new services for digital business transformation—the rapid and escalating value derived from the interconnectivity of people, processes, data, and things.”

Understanding the Key Growth Drivers for Router Sales

MEA and Europe expected to lead in mobile data traffic growth

As the graph shows, mobile data traffic in the Middle East and Africa is projected to grow at a CAGR (compounded annual growth rate) of 72% by 2019. Central and Eastern Europe is expected to grow at a CAGR of 71%, whereas Asia-Pacific could grow at a CAGR of 58% by 2019. By comparison, mobile data traffic in Latin America, North America, and Western Europe is expected to grow at a CAGR of 59%, 47%, and 48%, respectively.

Notably, Cisco accounts for 3.2% of the Technology Select Sector SPDR (XLK). The other top holdings of XLK include Apple (AAPL) (15.6%), Microsoft (MSFT) (11%), Facebook (FB) (5.6%), and Google (GOOGL) (5.1%).

In the next part, we’ll take a look at the collaboration market.

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