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Ethernet switches find greener pastures in data centres

Posted: 02 May 2014  Print Version  Bookmark and Share

Keywords:Ethernet  switch  data centre  Dell'Oro Group 

Ethernet switches are making a quantum leap towards mega data centres, a sector that increasingly dominates a changing industry where available market is declining and business is transferring to China.

Those were the conclusions Alan Weckel, VP for enterprise and data centre research at Dell'Oro Group, presented in a talk at the recently held Ethernet Summit.

The market for Ethernet switches in mega data centres will rise from about $10 billion this year to more than $14 billion in 2018, dominating the overall market (below).

Ethernet switch market

Ethernet switching market shifts to big datacenters. (Source: Dell'Oro Group)

Since 2011, merchant silicon has been supplanting ASICs, with Broadcom and Intel's Fulcrum capturing significant share. This year marks the transition to a fully horizontal market with operating systems, chips, and systems all coming from separate companies, said Weckel.

The need for speed

Switch attach rate

Switch attach rate on servers (Source: Dell'Oro Group)

"Tried and true Gigabit Ethernet is still going strong in enterprise switches, but they will shift to 10G in the next two years, probably by vendors pushing their strategies," Weckel said.

10G will get one last burst of growth from enterprises transitioning to 10GBase-T, the copper version. Cloud datacenters are deploying 10G today and looking at higher speeds such as 40G and 100G, he added.

Unfortunately for vendors, margins are shrinking. "40 Gbit has no major price premium. Price premiums are shrinking—that's going to change how people architect and build their networks."

Data centre revenues

Data centre revenues for Ethernet switches (Source: Dell'Oro Group)

The big get bigger

Ethernet switch revenues

Ethernet switch revenues in the data centre (Source: Dell'Oro Group)

The seven largest mega data centres, web giants such as Amazon and Google, buy as many Ethernet switches as the next 43 biggest data centres combined, Dell'Oro estimates (above).

"If you spun out Google networking it would be the second biggest networking vendor next to Cisco. [But] their requirements are diverging more and more with those of traditional enterprises," Weckel said.


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