Following are highlights from the first quarter 2018 edition of the IHS Markit Data Center Network Equipment Market Tracker, which contains data and analysis for the quarter ended December 31, 2017.
Data center network equipment revenue, including data center Ethernet switches, application delivery controllers (ADCs) and software-defined enterprise WAN (SD-WAN), totaled $13.7 billion in 2017, increasing 13 percent over the previous year.
In the short term, investment in physical infrastructure is still driving data center network equipment revenue growth. However, in 2018 and 2019 the effect of server virtualization will slow the market, with fewer — but higher capacity — servers reducing the need for data center Ethernet switch ports, along with the move to virtual ADCs.
“The adoption of lower-priced bare metal switches will cause revenue growth to slow,” said Clifford Grossner, Ph.D., senior research director and advisor, cloud and data center research practice, IHS Markit. “The ongoing shift to the cloud not only moves network equipment out of the enterprise data center, but also requires less equipment, as the cloud represents data center consolidation on a wide scale.”
Data center network equipment highlights
- Data center network equipment revenue was on the rise, year over year, in all regions: North America and Europe, Middle-East and Africa (EMEA) each increased 10 percent in 2017; Asia Pacific (APAC) was up 23 percent; and Caribbean and Latin America (CALA) rose 2 percent.
- 25GE and 100GE data center switching ports increased three-fold year over year.
- New 200/400GE developments are underway, and shipments expected to begin in 2019.
- Long-term growth in the data center network equipment market is expected to slow to 6 percent in 2022, as SD-WAN revenue growth slows due to the migration from the enterprise dater center to the cloud.
- SD-WAN revenue is anticipated to reach $3.6 billion by 2022; the next wave for SD-WAN includes increased analytics, with artificial intelligence (AI) and machine learning (ML) providing multi-cloud connectivity.
Revenue results from key segments
- Data center Ethernet switch revenue rose 13 percent over the previous year, reaching $11.4 billion in 2017.
- SD-WAN market revenue hit $444.1 million for the full-year 2017.
- Bare metal switch revenue was up 60 percent year over year in the fourth quarter of 2017.
- ADC revenue was down 5 percent year over year in 2017.
The IHS Markit Data Center Networks Intelligence Service provides quarterly worldwide and regional market size, vendor market share, forecasts through 2022, analysis and trends for data center Ethernet switches by category (purpose-built, bare metal, blade, and general purpose), port speed (1/10/25/40/50/100/200/400GE) and market segment (enterprise, telco and cloud service provider). The intelligence service also covers application delivery controllers by category (hardware-based appliances, virtual appliances), SD-WAN (appliances and control and management software), FC SAN switches by type (chassis, fixed) and FC SAN HBAs.
Vendors tracked include A10, ALE, Arista, Array Networks, Aryaka, Barracuda, Broadcom, Cavium, Cisco, Citrix, CloudGenix, Dell, F5, FatPipe, HPE, Huawei, InfoVista, Juniper, KEMP, Radware, Riverbed, Silver Peak, Talari, TELoIP, VMware, ZTE and others.