White box switch revenues up 95% in one year says Infonetics

The shift toward bare metal and white box switches in data center networks is driving revenue toward software and will lower margins for all Ethernet switch vendors. That’s the conclusion of the second quarter 2014 (2Q14) "Data Center Network Equipment" report from Infonetics Research.

The report, which tracks data center Ethernet switches, Ethernet switches sold in bundles, application delivery controllers (ADCs), and WAN optimization products, found that data center Ethernet switch revenue grew 12% in 2Q14 compared to the previous quarter to reach $2.1 billion.

White box switches represented 6% of revenue and 12% of ports shipped in the data center in 2Q14. Worldwide, white box Ethernet switch revenue in 2Q14 is up 14% from the previous quarter, and up 95% from the same period a year ago, says the market research firm.

"White box switching continues to be a transformational element in data center networking, with white box switch port shipments already accounting for 12% of data center Ethernet ports shipped," said Cliff Grossner, directing analyst for data center, cloud, and SDN at Infonetics Research. "We look for white box switches to have increasing impact on data center switching.

He cites, as an example, Dell entering the market for data-center-in-a-rack and application-in-a-rack in partnership with VMware and Cumulus Networks, using Dell's bare metal physical switch hardware with Cumulus' switch operating system.

In 2Q14, global ADC revenue totaled $497 million and is up 15% over 2Q13 and up 8% over 1Q14, driven by cloud service providers and enterprises. Virtual appliance revenue made up 13% of total ADC revenue in 2Q14 and is growing rapidly as cloud services, hybrid cloud, and the shift to cloud-architected data centers create demand for virtual ADCs.

Despite renewed interest as a result of cloud-managed WAN optimization, the WAN optimization market is still well below its 4Q11 high of $247 million.

Infonetics' quarterly data center equipment report provides worldwide and regional market size, vendor market share, forecasts through 2018, analysis, and trends for data center network equipment including data center Ethernet switches, application delivery controllers (ADCs), WAN optimization appliances, and Ethernet switches sold in bundles.

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