Worldwide data center network equipment revenue in the fourth quarter of 2016 was up 4 percent sequentially, reaching $3.5 billion. For the full year, revenue was up 10 percent to $12.9 billion.
The data was compiled by IHS Markit, which segmented the market into three customer categories: enterprise, cloud service provider (CSP), and telco. It projects that within five years, the CSP and telco segments will eclipse the enterprise market in terms of relative size.
“The CSP and telco segments are expected to squeeze out the enterprise in data center switching by 2021 as Ethernet capacity measured in 1GE port equivalents shipped to CSPs reaches 44 percent of total capacity (up from 25 percent in 2016), to telcos reaches 22 percent (up from 19 percent), and to the enterprise drops to 34 percent,” according to the summary of the report, written by IHS Markit analyst Cliff Grossner.
And while the firm expects that long-term market growth is assured, it’s expecting a trough next year. “We look for long-term growth in the data center network equipment market to slow to 2018 and then increase out to 2021 as SD-WAN reaches $2.9 billion.”
That might have something to with the market getting roiled with a flood of new options. IHS Markit enumerated several of them.
- Barefoot Networks’ Tofino is now available in switches from Taiwan-based Edgecore Networks and WNC.
- Cavium’s Xpliant-based Wedge 100C switch design was contributed to the Open Compute Project (OCP), targeting CSP and telco network functions virtualization (NVF) markets.
- Cumulus Networks announced the availability of its operating system for Backpack, Facebook’s white box bare metal chassis, and is partnering with Celestica to make Backpack available for preorder with Cumulus Linux.
- And Huawei is challenging Arista for the number-two spot in data center Ethernet switching.
The products that make up the market include Ethernet switches, application delivery controllers (ADCs), software-defined wide area networking (SD-WAN), and WAN optimization appliances.
In the quarter just concluded, IHS Markit reports that data center Ethernet switch revenue rose 8 percent, compared to the same quarter a year ago. Bare metal switch revenue was up 27 percent year-over-year. ADC revenue was down 3 percent sequentially, and down 8 percent year-over-year. WAN optimization appliance revenue declined 9 percent in the fourth quarter of 2016 and fell 20 percent from a year ago.