“In a year marked by economic recalibration and strategic introspection within the network security domain, the industry’s gravitation towards SaaS and virtual solutions has been nothing short of revolutionary,” said Mauricio Sanchez, Sr. Director, Enterprise Security and Networking at Dell’Oro Group.

“Excess inventory, worsening macroeconomic conditions, and higher interest rates were the main reasons cited for the decline in these regions,” said Jimmy Yu, Vice President at Dell’Oro Group. “North American service providers accumulated excess inventory after splurging on equipment in 2021 and 2022. We estimate that North American optical equipment sales increased nearly 30 percent in that period.

“The disruptions caused by component shortages and supply chain bottlenecks that started over two years ago are still occurring,” said Jimmy Yu, Vice President at Dell’Oro Group. “Once supply freed up, router manufacturers were able to fulfill backlogged orders at a faster pace, driving High End Router revenue up 12 percent year-over-year in the first half of 2023.

“The MCN market ended up with lower revenues in 2023 than in 2022 after the steep slide in Y/Y revenues in 3Q 2023 and 4Q 2023. All regions had a negative growth rate for the quarter, with only North America and Europe, Middle East, and Africa (EMEA) showing a positive growth rate for the year 2023,” stated Dave Bolan, Research Director at Dell’Oro Group.