[167 Pages Report] A data center switch is a multiport network bridge designed to build a network connection in a data center that allows receiving, processing, and routing of data from one destination to another. Large enterprises and cloud service providers primarily use datacenter switches. The increasing workload in the data center today demands highly scalable, reliable, and high performing switching solutions.

The overall data center switch market was valued at USD 13.09 billion in 2017 and is expected to reach USD 17.69 billion by 2023, at a CAGR of 4.92% during the forecast period. The data center switch market is expected to witness lucrative growth in the next five years. The high demand for switches in data centers is owing to the connectivity requirements between large numbers of servers over different tiers. The major factors driving the market growth include the need for simplified data center management and automation, high demand for cloud services, and a surge in internet multimedia content and web applications. The rising trend of bare-metal switches and growing bandwidth requirements in data centers are the key growth opportunities for the players in the data center switch market

The market for access switches is expected to grow at the highest CAGR during the forecast period.

The highest growth of the market for access switches is due to extensive network connectivity offered by these switches to distribution layers as well as different end-users. Access switches are not high-powered switches, but the number of switches required is high over a multi-layered network compared to core and distribution switches. Access switches need more ports to move the data from one network to another so that the load can be balanced. Thus, these switches ensure connectivity between servers and networks. Technological improvements in the market, such as the increase in the bandwidth and performance and the expansion of servers and data centers across different industries, will increase demand for access switches.

The market for InfiniBand data center switches to grow at the highest CAGR during the forecast period.

The growth of the Ethernet data center switch market is due to the high performance and scalability offered by Ethernet switches. The expansion of data centers and growth in virtualization technology propel the demand for switches with higher bandwidth. Ethernet is a traditional midrange technology that also offers a convenient solution to meet the increasing data center connectivity requirement. The highest growth of InfiniBand switches is significant because of the high-bandwidth solution for each port under a competitive price that InfiniBand switches offer.

The data center switch market for cloud service providers is expected to grow at the highest CAGR during 2018�2023.

The increasing enterprise applications require high-performance connectivity, constant uptime, high throughput, and high reliability to manage vast amounts of data. To address these requirements, data center switches are being adopted in enterprises. Powered by dynamic architectural solutions, these data centers are being evolved. Enterprises across different industries have been increasingly adopting digitization to improve their business processes.

Datacenter switches are increasingly being deployed in the data centers of cloud service providers. Today, most data centers are following the cloud computing concept. Datacenter switches in data centers offer high speed, mass volume data exchange, and energy-efficient hierarchical flow. Datacenter switches support an ever-increasing volume of information and faster data processing. Also, the major drivers for the data center switch market growth for cloud service providers include the growing trend of adopting data analytics technology, rising demand for organizations for agile, scalable, and cost-effective computing, and high penetration of hybrid clouds.

>10 gbps to <40 gbps data center switches expected to account for the largest market share by 2023

Data center switches having >1 Gbps to ≤10 Gbps bandwidths are widely adopted as they meet the requirements of most of the distribution and access switches. >1 Gbps to ≤10 Gbps switches are available over access, distribution, and core hierarchical layers in data centers.

>40 Gbps switches are recently being commercialized. One of the major drivers for the growth of the market for switches having a bandwidth of 100 Gbps and above is the expansion of data centers owing to the growing internet multimedia content and web applications. Ethernet and InfiniBand technology-based switches currently have 100 Gbps bandwidth, and several companies are consistently enhancing their product portfolio and launching higher bandwidth switches.

North America expected to account for the largest market share in 2017

North America accounts for the largest market size, and the similar trend is likely to continue owing to the increasing IT capacity requirements and rising adoption of new data center technologies. The market in the US is expected to experience a greater traction as a significant number of organizations are likely to opt for cloud services to save their upfront cost of building new data centers for business continuity. Also, the US is the home for global cloud service providers and data center infrastructure service providers such as Amazon Web Services (US) and Microsoft (US). Moreover, the leading companies in data center switch market that generate more than half of the revenue are based in the US

Market Dynamics

Driver: Need for simplified data center management and automation

There has been a significant increase in data centers. The data center architecture is changing; the focus is more on offering integrated nodes, higher bandwidth speeds, and more intelligent data center architecture. The increasing demand for storage solutions, owing to the Big Data and other computing and analytics platforms, is one of the primary reasons behind the development of data centers across the world. The introduction of the Internet of Things has given rise to the generation of a vast amount of data. Big Data applications, such as business analytics, scientific computing, financial transactions, social networking sites, and search engines, are increasing rapidly. All these applications handle large datasets and require high-performance IT infrastructure to achieve fast-processing throughput.

Restraint: Presence of self-reliant enhanced servers

The implementation of virtualization in data centers is gaining popularity among organizations. Virtualization helps eliminate hardware issues inside a data center and allows virtual machines to be easily moved. Virtualization enables provisioning of resources and planning capacity, consolidation of data to save space, reduction in time to offer new servers, improvement in manageability, and optimum utilization of resources. With increasing virtualization, interconnect technologies are also becoming virtualized. The connections between different servers are increasingly handled by virtual switches running on the same servers, which can hamper the demand for switches over enhanced servers that deliver upstream core connectivity with optical cross-connects. This will eventually route the traffic based on directional guidance from the server and ensures the decision by the server itself on the specific packet and number of packets that need to be sent.

Opportunity: Rising trend of bare-metal switches

With bare-metal switches, network hardware and software are desegregated to implement abstract network architectures and offer greater agility and cost savings over traditional data center switches. Bare-metal switches can be loaded with the operating systems of a user�s own choice. Bare-metal switch manufacturers offer cost-efficient solutions, along with original design manufacturers such as Accton, Quanta QCT, and Alpha Networks. This allows the users to select the best-assembled solutions to support their applications. For instance, in 2017, D-Link (Taiwan), one of the global companies in the data center switch market, launched the DXS-5000 Series 10 GbE bare-metal switches based on open networking standards to gain a competitive advantage in a scenario of increasing adoption of bare-metal switches. Large cloud service providers, such as Google and Amazon, have a high demand for bare-metal switches as they have their customized software integrated into data center orchestration and management platforms.

Challenge: Creating compatibility with different data center architectures

The most significant gains in data center efficiency come from the system-level infrastructure. Several virtualizations, computing, storage, and cloud technologies have been deployed to help increase scalability and flexibility in the data center. Still, each layer of new technology makes the data center more complex and less agile, and it becomes challenging to create compatibility between different data center technologies, which adds substantial costs and delay in new deployments. Additionally, a few vendors offer closed architectures, which limits the flexibility for workload expansion.

Challenges pertaining to data center switches are associated with different parameters such as design, performance, and flexibility. Earlier, the data center traffic was mainly north-south (i.e., transfer of data in and out of the data center), but in the last few years because of increasing analytics platforms east-west (i.e., removal of data within the data center) traffic is also growing. At the same time, the traditional architectures that were optimized to handle the north-south traffic face challenges to manage east-west traffic. Although the data center switches with increased bandwidths are capable of handling large workloads, practically there is much complexity involved in implementing high-bandwidth solutions across different architectures. For instance, in the conventional network design of interconnected switches, computing resources that work along with the switches may not utilize the full bandwidth. Eventually, it will limit the bandwidth available at the root of the communication tree. Thus, causing a delay in servicing critical business functions.

Therefore, although the data center switches today are available with high performance and scalability, the compatibility with design architectures of data centers may hamper their performance and could limit the growth of the data center switch market.

Scope of the Report

Report Metric Details Market size available for years 2015 � 2023 Base year considered 2017 Forecast period 2018 � 2023 Forecast units Billion (USD) Segments covered Type, Technology, Bandwidth, End User, Region Geographies covered North America, Europe, APAC, and RoW Companies covered Key market players include,

Cisco Systems, Inc. (Cisco) (US), Arista Networks, Inc. (Arista Networks) (US), Huawei Technologies Co., Ltd. (Huawei) (China), Hewlett Packard Enterprise (HPE) (US), and Juniper Networks, Inc. (Juniper Networks) (US). Also, a few major companies, namely NEC Corporation (NEC) (Japan), Lenovo Group Ltd. (Lenovo) (China), Mellanox Technologies, Ltd. (Mellanox Technologies) (US), Extreme Networks, Inc. (Extreme Networks) (US), Fortinet, Inc. (Fortinet) (US), ZTE Corporation (ZTE) (China), D-Link Systems, Inc. (D-Link) (Taiwan), Silicom Ltd. (Silicom) (Israel), Quanta Cloud Technology (QCT) (Taiwan), Dell, Inc. (Dell) (US), Bay Microsystems, Inc. (Bay Microsystems) (US), Cumulus Networks, Inc. (Cumulus Networks) (US), Edgecore Networks Corporation (Edgecore Networks) (Taiwan), Centec Networks Co., Ltd. (Centec Networks) (China), and H3C Technologies Co., Limited (H3C Technologies) (China).

The research report categorizes the Data Center Market to forecast the revenues and analyze the trends in each of the following sub-segments:

Data Center Market, By Type:

Core Switches

Distribution Switches

Access Switches

Data Center Market, By Technology:

Ethernet

Fibre Channel

InfiniBand

Data Center Market, By Bandwidth:

< 1 Gbps

>1 Gbps to <10 Gbps

>10 Gbps to <40 Gbps

>40 Gbps

Data Center Market, By End User:

Enterprises

Telecommunications Industry

Government Organizations

Cloud Service Providers

Data Center Market, By Geography:

North America Canada US Mexico

Europe UK Germany France Rest of Europe (RoE)

APAC China Japan Singapore India Australia Rest Of APAC

RoW

Key Market Players

Cisco (US), Arista Networks (US), Huawei (China), HPE (US), Juniper Networks (US).

Recent Developments

In June 2017, Arista Networks (US) launched new software and hardware for the Arista R-Series platform to accelerate cloud migration and digital transformation. The new platform has the capacity to deliver more than 150 Tbps for switching and routing applications.

In June 2017, HPE (US) launched the Aruba 8400 Core Switch and ArubaOS-CX Operating System as part of its enterprise core and aggregation switch portfolio. The product delivers intelligent edge capabilities for advanced cloud and automated network solutions.

In April 2017, Huawei (China) announced to release CloudEngine switch networking modules, creating Ansible networking modules of CloudEngine switches. The CloudEngine switch networking modules help in achieving better network automation and integrated management.

In March 2017, Juniper Networks (US) launched a new data center open cloud interconnect solution to accelerate the cloud service delivery. The company�s open cloud interconnect portfolio includes QFX series switches, along with edge router and contrail networking.

In March 2016, Cisco (US) stepped into another data center innovation by launching Cisco next-generation nexus switches and software. Nexus switches provide different bandwidths including 25, 50, and 100 Gbps at about 50% lower cost than other comparable solutions with higher reliability and lower power requirements.

Critical questions the report answers:

Which are the most significant revenue-generating regions in the Data Center Market ?

? How will the market drivers, restraints, and future opportunities affect market dynamics?

Where will all the advancements in technology offered by various companies take the industry in the future?

What are the significant upcoming technology trends in the market?

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