IHS Markit recently released its Data Center Network Equipment market tracker, which showed that worldwide data center Ethernet switch revenue grew 12% YoY in 3Q17, reaching $2.9B. Key segments driving demand were purpose-built switches which grew 13% YoY and bare metal switches which grew 47% YoY and continues to flourish as customers transition from traditional switches to white box and branded bare metal models.

Worldwide data center Ethernet switch ports shipped grew 24% YoY in 3Q17, reaching 12.5M. 25GE and 100GE experienced significant uptake, resulting in 251% and 369% YoY growths, respectively; yet the 2 port speeds combined only make up 16% of ports shipped while 10GE still leads with 61% of ports shipped in 3Q17. We forecast 25/100GE ports shipped to rise to 46% combined and 10GE to decrease to 46% by 2021, as customers migrate from 10GE to 25GE server connections and 100GE ASPs decline making them more viable options for large and small cloud service providers (CSPs) to deploy.

IHS Markit expects trials for 200/400GE to begin in 2018 with production shipments occurring in 2019 and revenue to reach approximately $1B by 2021.

“We believe 200GE will be deployed first yet have a short shelf life as 400GE is expected to follow closely behind and will become the primary choice going forward. The gap in time will be solely determined by how long it takes for the higher speed to become production-ready with adequate supply. CSPs will be the main customers for 200/400GE as they transition from 100GE in an effort to satisfy increasing high-bandwidth demands,” said Cliff Grossner, Ph.D., senior research director and advisor for the cloud and data center research practice, IHS Markit.

More Data Center Ethernet Switch Market Highlights

  • The need for greater than 100GE speeds results in 200/400GE shipments beginning in 2019.
  • The continued adoption of 25GE between servers and ToR switches will push adopters of 25GE to upgrade to 100GE for inter-switch connectivity. This shift is now underway in the enterprise.
  • The market for 10GE/40GE has seen a shift with ASPs falling rapidly; the number of ports shipped is also slowing, with revenue growth of 10GE and 40GE port shipments following unit shipments.
  • CSPs are the earliest adopters of higher speeds and pave the way for use of higher-speed technologies; large DC cloud environments with high compute utilization requirements continually tax their networking infrastructure, requiring them to adopt high speeds at a fast rate, ultimately resulting in the lowest $/1GE ratios.
  • Vendor performance: Cisco continues to dominate and Arista is #2 in the DC Ethernet switch market; Cisco garnered 53% of DC Ethernet switch market revenue in 3Q17 with revenue up 5% YoY. Arista was #2 with 13% share and 50% YoY growth. Huawei was #3 with 7% share and 23% YoY growth.