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Ethernet switch market starts to specialise

23 May 2012

Vendors increasingly engineering devices to meet the requirements of specific applications, says research from Dell’Oro Group

      Customer requirements have always influenced the features that vendors incorporate into their Ethernet switch products, but growth in the market is increasingly driven by devices engineered to handle the requirements of specific applications, according to a recent report from market research company Dell’Oro Group.

In the period between 2003 and 2008, the market almost doubled, growing from $10.7 billion to $18.5 billion – but growth was fairly evenly distributed between low-end unmanaged switches, mid-range PoE (power over Ethernet) switches and high-end modular systems.

But since 2010, analysts at Dell’Oro Group have spotted a profound shift in favour of a single segment of customer deployment: the data centre. That was also reflected at the recent Interop conference in Las Vegas, where several vendors introduced switches for big data, virtualisation and cloud environments.

"We see intelligence moving back from the edge and into the data center core for easier management particularly as enterprises virtualize and outsource to the Cloud. We believe this shift to be a fundamental transition and we predict that products deployed in the data centre will be the growth engine of the Ethernet switch market over the next few years," said Alan Weckel, Senior Director at Dell'Oro Group.

"Manufactures can no longer develop a switch for one customer deployment location and modify it into a second location and expect success. Vendor shares will be affected by ever disparate requirements, forcing many vendors to specialize in only certain deployment locations or partner with other vendors to offer customers complete portfolios."

However, vendors that currently have more exposure in the data centre are likely to fare well and increase their Ethernet switch market share as the overall market becomes more focused on the data centre.

This is good news for Cisco, HP and Dell, the companies currently occupying the three tops spots in the Layer 2/3 data centre switching market, according to Dell’Oro Group. In 2011, this market grew 6% to reach $6.6 billion.

The overall Layer 2/3 Ethernet switch market totaled $19.8 billion in 2011, essentially flat from 2010 – but up 31% from 2009.

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