Network is expected to be the next disruptor and the avenue for innovations, as organizations look to conquer its space in this highly competitive, analytical, and information-driven world.

Networking Market

The Indian networking market posted a healthy year-on-year (Y-o-Y) growth of 10.5 percent in Q2 2016. According to IDC's APeJ Quarterly Switch and Router Tracker, the Ethernet switch market witnessed a Y-o-Y growth of 7.2 percent (in vendor revenue) and stood at 746 crore. The router market witnessed a significant Y-o-Y growth of 31 percent and stood at 460 crore in terms of vendor revenue.

Increased spending from both service provider and enterprise segments drove the switching market in Q2 2016. Demand for L3 and ADC increased significantly across organizations in Q2 2016. Large banking refreshes and spending from automobile, education, and professional services organizations were the key reason behind the growth of switching market in this quarter.

Router market witnessed a growth of 31 percent Y-o-Y in Q2 2016 due to investments from service providers segment for 4G rollout expansion. In enterprise space, majority of the growth was driven by professional services, banking, and discrete manufacturing units in Q2 2016. High-end routers saw a huge uptake from service providers segment whereas in SOHO, router was the clear winner in Y-o-Y growth in Q2 2016 amongst enterprise deployments.

Cisco continued its dominance with 63 percent market share followed by Huawei and Juniper. Huawei witnessed a significant Y-o-Y growth in market share from 6.6 percent to 9.5 percent in Q2 2016 due to uptake from telecom players. Brocade, F5 networks, and Array Networks showed a strong Y-o-Y growth in Q2 2016.

The WLAN market in India clocked a Y-o-Y de-growth of 4.8 percent in Q2 2016, and registered 308 crore. (vendor revenue). This growth was predominantly driven by access points category. Consumer segment witnessed a growth while enterprise and service provider business declined Y-o-Y in Q2 2016.

Personal and consumer services, transportation, telecommunications, and process manufacturing units were the key contributors toward Y-o-Y growth in Q2 2016. Increasing adoption of Internet of Things (IoT) is expected to drive WLAN market, especially in retail, healthcare, and manufacturing verticals in the near future.

D-Link continued to lead the market with 29 percent share followed by Cisco and TP-Link. D-Link and Cisco saw a Y-o-Y de-growth while TP-Link, Netgear, and Brocade posted a strong double-digit Y-o-Y growth in Q2 2016.

Forecast. The LAN market is expected to grow in single-digit in terms of compound annual growth rate (CAGR) for 2015 to 2020. BFSI and government segments are expected to attract incremental growth in the near future. Huge uptake from third-party datacenter players is expected to address the demand for cloud.

The WLAN market is expected to grow in single digit in terms of CAGR for 2015 to 2020. Wireless upgrades to 802.ac would be the key growth driver among consumers and enterprises segments. Increased adoption of bring-your-own-device (BYOD) would fuel growth for WLAN in the near future.

Storage Market

The Indian external storage market witnessed a de-growth of 5.9 percent Y-o-Y (in vendor revenue) and stood at 430 crore in Q2 2016.

Midrange storage segment continued with the trend of Y-o-Y growth while entry level and high-end storage systems declined Y-o-Y in Q2 2016. Availability of enterprise class features in midrange storage systems is propelling the growth for midrange storage arrays. Also due to increased cloud adoption, the entry-level storage market from SMB units is getting shifted to third-party data centers. However, third-party data centers are preferring midrange storage over entry-level systems to serve the SMB customers as well due to increased capacities and features.

Storage market was driven by banking and professional services in Q2 2016 while telecommunication vertical witnessed a sharp decline, but this market is expected to grow in 2017 due to expansion projects pertaining to 4G rollouts. Large banking refresh deals drove the market in Q2 2016 and the same is expected to continue in H2 2016.

The adoption of cloud storage/cloud back-up/DR as a service, and the like, are adversely impacting the traditional storage business. This trend has created a new buyer segment – third-party data centers – that is expected to grow. Third-party data center organizations have a better negotiation power than SMB units and hence a significant price-based competition is due in future.

Across verticals, organizations witnessed an uptake of all-flash arrays and hybrid flash arrays (HFA). All-flash arrays have gained momentum for workloads like OLTP (online transaction processing), business intelligence, billing, virtual desktop infrastructure, database, etc. The demand for both capacity and performance with a single box is addressed by hybrid flash arrays.

Increased demand for optimization technologies like virtualization, de-duplication, automatic tiering, compression, and thin provisioning across organizations is being seen. There are several proof-of-concepts running around software-defined storage and hyper-converged infrastructure as well. This clearly indicates the demand for new optimization technologies in the market.

Major Vendors Analysis. EMC continued to lead the market but witnessed a drop in its market share from 32.1 percent to 28.7 percent in Q2 2016 Y-o-Y. HPE achieved all-time high revenue in Q2 2016 due to an increased uptake from the banking vertical. Dell also witnessed a significant growth due to uptake from professional services and the government segment in Q2 2016. IBM, Netapp, and HDS saw a Y-o-Y decline in storage revenues in Q2 2016.

Forecast. The Indian external enterprise storage systems market is expected to grow in single digit in terms of compound annual growth rate (CAGR) for 2015 to 2020 time period. Banking and government sectors are expected to drive huge storage demand in the coming quarters. Government initiatives around digitization, smart cities, Make in India, and e-governance projects are expected to drive the storage demand in the near future.

Storage will become the next strategic asset toward achieving the new-age digital initiatives. However, the approach to conquer storage performance is expected to remain hybrid (flash and other alternatives) with a combination of cloud-based and data center options.

Server Market

The Indian x86 server market declined quarter-on-quarter (Q-o-Q) in Q2 2016 with 33,662 units shipped in Q2 2016 as against 40,488 units in Q1 2016. In terms of revenue, there was a 16.5 percent Q-o-Q decline registered in Q2 2016, according to IDC India.

Periodic investments from cloud service providers, home-grown hosting providers, and continued spending toward 4G deployments predominantly contributed to this quarter's server demand. Digitization across the banking sector and piece-meal demand from e-commerce and payment banks further fueled into Q2's compute demand. Overall spending on server has normalized back to its usual average, and the trend is expected to continue in the coming quarter as well.

The non-x86 server market declined by 25.2 percent Q-o-Q in terms of unit shipments and 3.7 percent in terms of revenue in Q2 2016. Communications and media and banking verticals continued to be the major contributors to this market.

Major Vendors. In India x86 market, HPE maintained its leading position in Q2 2016 with 34 percent market share in terms of unit shipments, followed by Dell with a market share of 25 percent. Lenovo's market share dropped further to 11 percent Q-o-Q. White box providers gained marginal market share of 2 percent, up from 11 percent in Q1 2016 to 13 percent in Q2 2016; however, they witnessed 6.1 percent decline in terms of absolute unit shipments Q-o-Q. Cisco's market share rose by 2 percent Q-o-Q, while Acer's share dropped by 1 percent.

On the revenue front, HPE continued to lead with 37 percent market share, followed by Dell at 27 percent market share. Cisco's market share stood at 12 percent in Q2 2016, closely followed by Lenovo at 10 percent.

Forecast. Government-backed Smart City projects and Digital India drive are expected to draw sizeable compute demand through the next few quarters. Ongoing banking refreshes and digitization initiatives are expected to propel server demand across most verticals including professional services, banking, education, and manufacturing.

The market is expected to pick up on the back of enterprise demand propelled by refresh/upgrade, analytics, and new digital projects requiring modern infrastructure. The emergence of cloud/DC buyers and white box players (in the mainstream) are two trends to watch out for.

Gaurav Sharma, Research Manager-Enterprise & IPDS (India), IDC

"Networking market is set to grow on the back of digital initiatives, 4G rollouts, and campuses. Consumer and enterprise need to always stay connected. Network is expected to be the next disruptor and the avenue for innovations, as organizations look to conquer its space in this highly competitive, analytical, and information-driven world."

Gaurav Sharma,
Research Manager-Enterprise & IPDS (India),
IDC

"Increased acceptance of hyper-converged infrastructure was witnessed among IT/ITeS organizations. This trend might have a marginal negative impact in the growth of AFA storage market, especially in VDI environments."

Dileep Nadimpalli,
Senior Market Analyst-Storage,
IDC India

"Although there's an evident slowdown in the server market, further investments toward 4G deployments and expansions in the cloud and local data center space continue to remain in the pipeline. Realization of the GST bill and on-going consolidations in the banking and e-commerce space are also expected to proliferate server demand from early next year.”

Ruchika Kakkar,
Server Market Analyst,
IDC India


 

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