We just published the latest edition of our 5-year forecast for the data center switch market.  Six months ago, when we published our July 5-Year forecast, we predicted that the data center switch market will be for the most part resilient to the pandemic. We also explained that most of the downward adjustment relative to our January 2020 Pre-pandemic forecast was driven by the non-Cloud segments, which include enterprises as well as Telco Service Providers (SPs). In the meantime, our July 2020 forecast for the Cloud segment showed only a slight downward revision relative to our pre-pandemic January forecast.

We just published the latest edition of our 5-year forecast for the Network and Security and Data Center Appliance (NSDCA) Market that spans Firewalls, Secure Web Gateways, Email Security, IDS/IPS, Application Delivery Controllers, and Web Application Firewalls. A year ago, we debated the effects of the US and China relationship and Brexit on the market, but this year all attention is on the COVID-19 pandemic. The pandemic is reverberating through the market with both near-term and long-term consequences.

At the beginning of 2020, we expected a solid year for the WLAN market, driven by a still humming economy and a technology upgrade cycle to Wi-Fi 6. After the pandemic hit, we revised our forecast down steeply (double digit decline)—similar to prior economic declines. As the year progressed, however, WLAN proved resilient and 2020 revenue is on track to come slightly lower than 2019—a remarkable result of government stimulus coming primarily from the US, followed by China and select countries in EMEA such as Germany. For example, the US’ E-Rate program, which provides telecommunications funding for K-12 schools, was opened to a second round in September 2020 to allow schools to request additional funds for 2020-21 to address surging bandwidth demand stemming from remote learning. In China, the government’s Made in China 2025 initiative has provided incentives for manufacturers to modernize their processes.

For the full year of 2020, we now predict the market to decline only low-single-digit, compared to our prior forecast of mid-single-digit decline. We expect the Cloud segment to grow at a low single-digit rate, in line with our prior predictions. However, we adjusted our forecast for the non-Cloud segment from high single-digit to mid-single-digit decline, as the anticipated recovery in 2H2020 will offset some of the weakness in the first half of the year (The non-Cloud segment was down 8% Y/Y in 1H2020).