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What Will Drive Infrastructure Platform Revenue for Cisco in Q3?

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Infrastructure Platform segment accounts for most of Cisco’s sales

In fiscal 2018, sales from Cisco’s (CSCO) Infrastructure Platform segment accounted for 77% of its total revenue. This segment consists of revenue from Cisco’s network offerings across the switching, routing, wireless, and data center businesses.

Research company IDC said it expected the Ethernet switch market to grow by 12.7% YoY (year-over-year) to $7.8 billion in the fourth quarter of 2018. In 2018, sales in the market rose by an estimated 9.1% to $28.1 billion.

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The worldwide enterprise and service provider router market experienced sales growth of 15.6% to $4.6 billion in the fourth quarter of 2018. IDC said it expected Cisco’s Ethernet switching sales to rise 13.2% YoY in the fourth quarter. According to IDC, Cisco’s market share in switching stood at 52.8% at the end of 2018.

The other top players in the switching space include Huawei, Arista Networks (ANET), and Hewlett Packard Enterprise (HPE) with shares of 20.2%, 6.5%, and 6.1%, respectively. Huawei grew its switching sales by 20.2% last year, while ANET and HPE grew their switching sales by 28.5% and 16.5%, respectively.

In the Enterprise Router vertical, Cisco’s sales fell 2.9% last year and ended 2018 with a share of 38.8%. Huawei’s router sales rose 22.5%, giving it a market share of 28.7%. Juniper (JNPR), another major player in routing, saw its share fall to 14.7% last year from 18% in 2017.

5G and WiFi 6 might be revenue drivers for Cisco

The shift to 5G remains critical for hardware networking companies, and it’s expected to be a key revenue driver over the next few years. Cisco recently adopted Wi-Fi 6, which it claims to be the new standard for Wi-Fi networks. W-Fi 6 could have over 3x more capacity than existing connections and is expected to be far more effective in high-density settings such as lecture halls, conference rooms, and stadiums.

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