The Ethernet Switch Market Is Booming
August 27, 2012 Timothy Prickett Morgan
The server market has stalled a little bit as Intel, Advanced Micro Devices, IBM, Oracle, and Fujitsu are in various stages of processor transitions. But the Ethernet switch market is going gangbusters as companies begin the transition to from Gigabit to 10 Gigabit Ethernet switching in the data center.
According to the box counters at IDC, the worldwide market for Layer 2 and 3 switching gear that adheres to the Ethernet protocol accounted for $5.52 billion in revenues, an increase of 8.5 percent year-over-year across all Ethernet port speeds. At Layers 3 through 7 in the network stack, vendors sold $376.1 million in gear, down 5.6 percent and reflecting a move toward flatter and fatter Layer 2/3 networks for many workloads rather than the tiered networks common for the past two decades.
In the quarter ended in June, Gigabit Ethernet switches collectively accounted for 55 million ports and revenues rose 6.5 percent, IDC reckons. And if you think 10GE ports are not taking off, shipments rose above 3 million ports in the second quarter and revenues for switches driving those ports were up 22.9 percent–and that is as the per-port costs of a 10GE switch and their companion server adapter cards have come down radically in the past year. With the latest Intel Xeon E5 processors, server makers are also putting 10GE ports on their motherboards, essentially making the 10GE networking free as 100Mbit and Gigabit were ahead of them, driving adoption in the data center during the dot-com boom and the ensuing bust.
Cisco Systems is still the king of Ethernet, with 62.1 percent of the Layer 2/3 Ethernet switch pie in the second quarter. But Cisco lost a half point of share in the overall pie. The company’s share of the 10GE switch space was higher, though, at 66.8 percent in the second quarter, and close to the 70 percent level that the company likes to have with emerging technologies.
Hewlett-Packard was the number two Ethernet switch vendor, but well behind Cisco with only 9.2 percent of that $5.52 billion in dough from Q2 sales. Alcatel-Lucent ranked third, with 3.07 percent share, followed by emerging Chinese giant Huawei Technologies with its 2.85 percent share. Upstart Juniper Networks, which is going through switch and router product transitions right now as Cisco was doing two years ago, garnered 2.48 percent of the Q2 pie. IBM, which has its own Networking division thanks to the acquisition of Blade Network Technology a few years back, got lumped into the Others category, as did Dell with its PowerConnect and Force 10 products.
By region, Ethernet switch sales were up 17 percent in Latin America and 15.4 percent in Asia/Pacific, with EMEA being a drag with only 5.2 percent revenue growth and North America also lowering the class average a bit with its 5.9 percent growth.