Blog post · October 26, 2026 · delloro.com
Dell'Oro Group says Enterprise Networking revenue rose 15% in 1H26
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- Also names Access Point
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Summary
Dell'Oro Group reports Enterprise Networking revenue grew 15% year over year in the first half of 2026, with all five segments posting double-digit gains. Pricing, AI infrastructure needs, and cybersecurity priorities are complicating the market picture for enterprise buyers.
Market Overview
Supply shortages and accumulated backlogs drove exceptional revenue growth in 2023, followed by a sharp correction as shipments normalized and enterprises worked through excess inventory. The market contracted in 2024 before returning to growth in 2025. With inventory digestion complete, enterprise spending has entered a new investment cycle shaped by technology refreshes, security modernization, rising prices, and shifting infrastructure economics.
Segment Performance
WLAN led the five markets in growth during 1H26, while Network Security contributed the most incremental revenue. Campus Switching, Branch Routing, and Enterprise Data Center Switching also grew at double-digit rates, but their underlying drivers differ. Renewed supply shortages and rising prices are intersecting with deployment growth and technology migration.
Campus Switching revenue grew at a double-digit rate in 1H26 even though port shipments were nearly flat following elevated shipment growth in 2025. In 2Q26, port shipments fell 5% while average selling prices (ASPs) rose 19%. Despite a large volume of end-of-support campus switches in the field, higher spending did not translate into a comparable increase in port shipments.
WLAN revenue growth was supported by higher access point shipments as Wi-Fi 7 adoption accelerated and enterprises ordered ahead of anticipated price increases. Wi-Fi 7 now accounts for most indoor access point revenue. Dell'Oro Group expects DDR4 memory shortages to push WLAN equipment prices higher in 2H26.
Recurring software licenses and advanced AIOps capabilities are becoming increasingly important revenue sources in a market historically dominated by hardware sales. These developments are changing both the economics of WLAN deployments and how vendors monetize their installed bases.
Pricing Pressure
DDR4 memory shortages are a major source of pricing pressure, as AI infrastructure buildouts have tightened component supply. Enterprise IT vendors have raised prices, redesigned products, and sought alternative sources. Because enterprise equipment is often quoted well before delivery, these increases take time to appear in reported revenue.
AI Demand Dynamics
AI infrastructure investment has been a strong catalyst for the broader Data Center Switching market, particularly among hyperscalers and specialized cloud providers. Enterprise demand is more measured. Growth in enterprise front-end Data Center Switching has been concentrated among large organizations, while smaller customers have continued to pull back on purchases.
Many enterprises are still deciding where AI workloads should run and whether expected benefits justify new on-premises infrastructure. Public cloud services offer an alternative to owning compute and networking equipment. The AI buildout can lift traditional networking revenue through price increases even where AI is not generating incremental equipment demand.
Cybersecurity and Modernization
Network Security was the largest contributor to Enterprise Networking revenue growth in the first half, supported by targeted Firewall refreshes and continued adoption of cloud-delivered security. Within Security Service Edge (SSE), separately monetized Data Security and Digital Experience Management capabilities are expanding faster than foundational access and inspection.
Vulnerability exposure and concerns about AI-assisted cyberattacks are making refresh decisions for aging switches, routers, and wireless access points more urgent. Channel discussions suggest security audits are identifying unsupported equipment and initiating replacement projects. Infrastructure modernization is becoming as much a resilience decision as a capacity decision.
SD-WAN continues growing in Branch Routing while traditional Access Router revenue contracts. Enterprises are using router refreshes to adopt software-defined connectivity and integrate networking with Secure Access Service Edge (SASE). Operational maturity, existing investments, and sovereignty requirements still favor hybrid or multi-vendor approaches in many environments.
Analyst Outlook
Dell'Oro Group remains optimistic about Enterprise Networking, although growth is likely to moderate from the first-half pace. Wi-Fi 7, installed-base refreshes, security requirements, and SD-WAN adoption provide durable support. Component shortages, higher equipment prices, and purchasing pull-forwards may dampen subsequent shipments even if modernization plans remain intact.
As 2027 approaches, the analyst will watch whether equipment demand withstands higher prices, whether AI investment spreads beyond cloud providers and the largest enterprises, and whether automation and cybersecurity investments deliver expected operational benefits. Sustaining expansion will depend on the underlying need to modernize rather than on higher prices or shifts in purchase timing.
Overall, the first-half rebound reflects a mix of durable investment, pricing effects, and purchase timing. For Decision Insights readers, the distinction matters because headline growth does not show equipment demand alone. This Analyst Signals brief reflects a neutral, fact-based summary of the original research note.
Our summary. The original keeps its own byline.