Ethernet switch market booming, says IDC

05 Sep 2012

Big rise in the purchase of 10GbE kit as companies look to install ‘fatter and flatter’ network architectures

In the race to install bigger, faster networks to underpin virtualisation, cloud and mobility projects, companies can’t buy Ethernet switches quickly enough, according to market analyst firm IDC.

In its 2Q2012 report on the worldwide market for Layer 2 and 3 switching gear, IDC reported revenues that jumped 8.5 percent from the second quarter of 2011, to reach $5.52 billion. As companies increasingly make the transition from Gigabit to 10 Gigabit Ethernet (10GbE) switching in the data centre, sales for these 10GbE switches increased 22.9 percent from 2Q2011 and 10GbE port shipments hit a record 3 million in the quarter, leading the overall market growth.

Lower down in the networking stack, however, sales were less robust, reflecting a general move towards ‘flatter and fatter’ Layer 2/3 networks, as opposed to more tiered networking architectures. Sales of equipment for Layers 3 through 7, for example, were down 5.6 percent year-on-year, at $376.1 million.

The strong performance of Ethernet switches, which saw revenue increases in every region, including Europe, demonstrates the key role that networking continues to play in new IT infrastructure deployments, according to IDC’s Rohit Mehra.

“10GbE, along with the emerging 40GbE Ethernet switch segments are leading the market to higher levels, clearly proving the point that growth in applications, virtualisation and mobility has to be looked at in conjunction with the underlying wired infrastructure in data centres and campus deployments,” he said.

In terms of vendor market share, Cisco remains at the top spot, with a 62.1 percent market share of the Layer 2-3 Ethernet switch market in the second quarter, although that was fractionally down year-on-year. But its share of the 10GbE switch market was higher, at 66.8 percent in the second quarter.

HP takes the number two slot, but lags Cisco by a considerable distance, with a 9.2 percent market share. Alcatel-Lucent took a 3.07 percent share and emerging Chinese giant Huawei Technologies came in fourth with a 2.85 percent share. Juniper Networks, meanwhile, garnered a 2.48 percent share.

The IDC findings would seem to support forecasts recently released by another IT analyst firm, Dell’Oro Group. In mid-August, analysts there predicted that the Layer 2/3 Ethernet switch market will grow to almost $25 billion in 2016, with the key driver being Ethernet switches designed for large data centre deployments. By 2015, they predict, 10GbE switch sales will make up the bulk of Ethernet switch revenue, while revenue in the 40GbE and 100GbE switch sectors will reach almost $3 billion by the following year and account for more than 20 percent of the market.

Alan Weckel, senior director of Dell’Oro commented: “The cloud is changing how networks are built and who owns data centre equipment.”

At IP EXPO 2012, Tony Gallacher, EMEA regional sales director at Brocade Communications, will present a seminar on ‘The Next Generation Data Centre Network’ on Day One of the event, Wednesday 17^th October. Day Two of the event will see Tony Cofeen of Infoblox discuss the move to IPv6.