E-guide

How COVID-19 Will

Reshape 2021
Enterprise Network
Spending
 E-guide

In this e-guide
How COVID-19 will reshape 2021
How COVID-19 will reshape enterprise network spending
2021 enterprise network
spending p.2 Lee Doyle, Principal Analyst at Doyle Research

About SearchNetworking p.7

Accelerated digital transformation, network traffic shifts and economic
disruption in the wake of the COVID-19 pandemic have combined to alter the
landscape of the enterprise networking industry.

Organizations have responded to these market forces by increasingly

turning to the cloud for both application delivery and compute. This shift has
meant a greater need for direct internet access and a reduction in data
center investments. At the same time, the rapid shift to work at home has
reshaped traffic patterns away from the campus and the branch toward
home internet services.

Although the forces that currently fuel the current economic downturn are
uneven in their effect, it's clear that the most affected industries -- among
them retail, restaurants, hotels and the travel sector -- will be trimming their
IT and network spending.

To better understand how the market is being reshaped, Doyle Research

examined enterprise network spending and telecom service provider

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spending. The analysis largely excluded hyperscale cloud providers, such as

In this e-guide AWS and Microsoft Azure, which continue to register strong growth and
possess markedly different network requirements from other organizations.
How COVID-19 will reshape
2021 enterprise network
spending p.2
Network spending overview
About SearchNetworking p.7 Each year, enterprise organizations -- both large and small, including
government -- spend more than $50 billion on network and network security
hardware and software. The largest segment of network spend is Ethernet
switching at over $20 billion, followed by network security at more than $14
billion, Wi-Fi at over $5 billion, and routing and software-defined WAN (SD-
WAN) at $5 billion.

Cisco is by far the largest provider of network equipment in this sector --

especially outside of China -- followed by HPE/Aruba, Extreme Networks,
Juniper Networks and Arista Networks, among others.

Communications service providers (CSPs), such as telco, cable and satellite,

annually spend over $80 billion on networking hardware and software,
including 4G/5G wireless for both edge and core, optical, routing, switching
and network security. Ciena, Cisco, Ericsson, Huawei, Juniper, Samsung,
Nokia and ZTE are the largest suppliers.

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In this e-guide
Data center network spending
How COVID-19 will reshape Data center networks account for approximately 40% of enterprise network
2021 enterprise network spending and have seen significant upgrades in terms of speed -- 10 Gb, 25
spending p.2
Gb, 100 Gb -- over the last several years. Large organizations with legacy
and new private cloud applications will continue to invest in this sector, but
About SearchNetworking p.7 the shift to IaaS and SaaS cloud platforms will prompt some organizations to
table their plans to upgrade their data center networks.

Leading technology drivers in the data center sector are high-speed

Ethernet switches and network security. Companies migrating to
microservices architectures that run on containers will drive new mesh-type
implementations. Leading suppliers for data center networks are Arista,
Cisco, Extreme, F5 Networks, HPE/Aruba, Juniper and Palo Alto Networks.

A significant part of the white-collar workforce will continue to work from home for
many organizations, so the reduction in traffic on the campus network will become
permanent.

Campus LAN spending

Within the enterprise segment, the campus LAN represents a large
percentage of Ethernet switch and Wi-Fi spending. The pandemic's effect is

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likely to be significant in campus LAN spending, as U.S. office occupancy

In this e-guide rates remain below 15%. A significant part of the white-collar workforce will
continue to work from home for many organizations, at least some of the
How COVID-19 will reshape time, so the reduction in traffic on the campus network will become
2021 enterprise network
permanent.
spending p.2
Enterprise network spending will see IT teams reallocate budgets to fund
About SearchNetworking p.7 critical and immediate needs, thus deferring upgrades in the campus
network. As work becomes more mobile, many companies will find that
building dual wired and wireless networks is no longer necessary. As a
result, Doyle Research expects campus Ethernet switch spending will
decrease significantly, especially in the U.S. over the next two years.

Branch networks and SD-WAN spending

Branch networks have fueled SD-WAN's rapid growth over the last several
years. They also account for roughly 20% of Ethernet switch, Wi-Fi and
network security revenues. SD-WAN spending remained strong in the first
half of 2020, while routing sales dropped correspondingly.

Industries most affected by the pandemic -- among them hospitality, retail

and restaurants -- represent a significant number of branches. As a result,
some organizations may decide to forgo upgrading their branch IT
infrastructure to support SD-WAN. Leading branch network suppliers

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include Cisco, Extreme, Fortinet, HPE/Aruba/Silver Peak, Palo Alto and

In this e-guide VMware.

How COVID-19 will reshape

2021 enterprise network Telecom and 5G spending
spending p.2
The demand for high-quality home broadband services has generated a 25%
About SearchNetworking p.7 increase in core internet traffic. Wireless operators continue to upgrade
their networks to 5G, especially in the radio access network (RAN) segment.

Doyle Research anticipates a modest decline in Capex spending in this

sector, as many CSPs search for technologies that provide more bandwidth
at lower costs than those traditionally charged for telecom equipment. For
example, we see a growing interest in OpenRAN, which can accommodate a
variety of services running on white box switches and servers. CSPs will also
be evaluating new converged optical/routing and software routing
approaches, such as those marketed by Volta Networks and DriveNets.

Home network spending

The home network -- relying on Wi-Fi, VPN and broadband services -- has
traditionally been a relatively small part of IT, with fewer than 10% of
employees working full time at home as recently as 2019. The pandemic
ushered in a massive increase in the number of full-time work-at-home

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employees. This has driven organizations to reallocate their home network

In this e-guide investments, earmarking funds to subsidize broadband access, to upgrade
VPNs and to purchase PCs, devices and other furnishings to equip workers'
How COVID-19 will reshape offices.
2021 enterprise network
spending p.2 Over time, VPNs will be replaced or augmented by zero-trust network
access (ZTNA). Home network spending will permanently increase, spurring
About SearchNetworking p.7 additional demand for enterprise-grade Wi-Fi, SD-WAN and ZTNA.

The pandemic has likely permanently altered the corporate network

environment as companies shift to remote connectivity and migrate more of
their applications to the cloud. Overall enterprise network spending will
change as a result. Industry verticals in sectors most affected by COVID-19 -
- among them travel and hospitality -- will have to reevaluate their branch
and network spending. Doyle Research expects campus network spending
to drop significantly while companies invest in technologies designed to
make home networks safe and reliable.

About SearchNetworking

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In this e-guide
About SearchNetworking
How COVID-19 will reshape
SearchNetworking.com is one of the largest and most active online
2021 enterprise network communities dedicated to the enterprise network.
spending p.2
IT professionals in almost every industry rely on SearchNetworking.com for
About SearchNetworking p.7 industry news, technical tips and valuable best practices on topics like routing,
switching, network security, network/systems management, convergence/VoIP
and wireless LANs, so they can keep their networks up to date and cope with
constant change.

For further reading, visit us at

www.SearchNetworking.com
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