Coronavirus continues to affect US and Europe data center switch market

Dell'Oro Group’s report shows that China's revenues grew by double digits year over year in the fourth quarter, despite Coronavirus.

Dell’Oro Group released a report showing the data center switch market worldwide. The report indicates that the data center switch market grew by 1% year over year in Q4. This rate shows the slowest growth rate in six years. There is a decline of data center switch revenue in North America and Europe, however, China’s revenues grew by double digits year over year in the fourth quarter.

A mixed performance in US cloud service providers

Sameh Boujelbene, senior director at Dell’Oro Group said:

“In line with our expectations, the top four U.S. cloud service providers posted mixed performance. Google and Amazon’s strong growth was partially offset by weakness from Facebook and Microsoft. Additionally, ongoing macroeconomic uncertainties in North America and Europe continued to weigh on network spending from Tier 2/3 cloud service providers and large enterprises.

However, what’s intriguing this quarter is the growth witnessed in China despite macroeconomic headwinds in the region. We believe part of this growth could reflect inventory buildup as well as some government projects to stimulate the economy.”

According to the report, some of the hyper-converged service providers’ easing back on their CAPEX last year caused the decline in the switch market growth. For instance, Arista Networks had a sharp fall on its revenues last year because of cloud customers reducing their CAPEX.