In 2Q18, data center (DC) Ethernet switch revenue reached $2.9B, up 2% YoY, and ports reached 14M, up 14% YoY, mainly due to significant 25/100GE port growth.

During the quarter both 25GE and 100GE port shipments grew in the triple-digits, 150% and 220% YoY, respectively. General purpose and bare metal switches attributed the most to 100GE port increases, both grew over 400% YoY; purpose built switches are credited with being the primary drivers for 25GE port increases, growing over 140% YoY during the quarter. “These results were no surprise as 100GE and 25GE switches based on merchant silicon are readily available and ASPs continue to decline, making the economics for higher speed ports more attractive,” says Devan Adams, MBA, senior analyst, Cloud and Data Center Research Practice, IHS Markit.

Over the past few months merchant programmable switch silicon has seen increased adoption. In February, Arista released a series of top-of-rack (ToR) switches based on Broadcom’s programmable Trident-3 ASICs; then, in June it introduced a series of DC switches based on Barefoot Networks’ programmable Tofino silicon. Also, in June, Cisco announced Nexus switches based on Broadcom’s Trident-3 and Barefoot’s Tofino chips. “These releases show acceptance by the #1 and #2 DC Ethernet switch vendors, according to our 2Q18 Data Center Network Equipment Market Tracker, and serve as vital endorsements for programmable switch silicon by 3rd party merchants as the use of their chips extend from White Box to the top traditional switch vendors,” said Adams.

Pure 25GE port shipments began in 4Q15 with just over 375 ports shipped and has reached 1.6M in 2Q18. 25GE ports represented 6% of port shipments in CY17 and we expect them to capture 25% of shipments in CY22 due to double-digit growth out to CY22 from enterprises replacing 10GE with 25GE. 100GE port shipments had 9% share in CY17 and we expect them to top 36% by CY22.

“We believe some of the success of 100GE is attributed to cloud service providers (CSPs) deploying ToR switches with 100GE ports using QSFP28 optical transceivers that provide 4x25GE server connectivity”, says Adams.

More Data Center Network Market Highlights

  • In 2Q18, 25GE had 11% port shipments share, up 3.1 points QoQ; and 100GE’s share was 23%, up 1.1 points
  • We forecast DC Ethernet switch capacity shipped to CSPs to reach 55%, telco to reach 23%, and enterprise to drop to 22% in CY22
  • Software-defined enterprise WAN revenue increased 25% QoQ; growth continues driven by larger deployment sizes and the service provider channel ramping
  • 2Q18 ADC revenue decreased 2% QoQ and was down 2% YoY

Data Center Network Equipment Report Synopsis

The IHS Markit Data Center Network Equipment market tracker is part of the Data Center Networks Intelligence Service and provides quarterly worldwide and regional market size, vendor market share, forecasts through 2022, analysis and trends for (1) 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], (2) application delivery controllers by category [hardware-based appliance, virtual appliance], and (3) software-defined WAN (SD-WAN) [appliances and control and management software]. Vendors tracked include A10, ALE, Arista, Array Networks, Aryaka, Barracuda, Cisco, Citrix, CloudGenix, CradlePoint, Dell, F5, FatPipe, HPE, Huawei, Hughes, InfoVista, Juniper, KEMP, Nokia (Nuage), Radware, Riverbed, Silver Peak, Talari, TELoIP, VMware, ZTE and others.