Worldwide sales of data center switches in the first quarter of 2023 set a revenue record for the fourth consecutive quarter, according to Dell’Oro Group. Revenues jumped 20% year-over-year to exceed $4.5 billion, with Arista and NVIDIA among the most successful vendors, the market research firm reveals in its newly released Ethernet Switch – Data Center Quarterly Report.
"The substantial growth was primarily fueled by the ongoing release of the backlog as supply conditions continue to improve. In fact, some vendors reported 40% reduction in lead times on certain products compared to the prior quarter," explained Sameh Boujelbene, vice president at Dell’Oro. "Additionally, the market started to see some positive impact of list price increases implemented by most vendors about a year ago, as newer backlogs started to gradually get released.
"Revenue growth was broad-based across all major vendors, with Arista leading the pack by growing three times faster than the overall market and gaining over six points of revenue share in the quarter. Another standout performer was NVIDIA, surpassing market growth and gaining more than one point of revenue share during the quarter," Boujelbene added.
Cloud service providers drove nearly two-thirds of the quarter’s revenue growth with the rest coming from the large enterprise segment. Google, Amazon, Microsoft, and Meta continue to lead deployments, but Dell’Oro reports that an increasing number of shipments are going to Tier 2/3 cloud service providers and large enterprises. Shipments of 200-Gbps and 400-Gbps switches composed approximately 25% of revenue and 20% of the total shipments during the first three months of the year.
Dell’Oro’s Ethernet Switch – Data Center Quarterly Report offers an overview of the market that includes Ethernet switches for server access, server aggregation, and data center core. (Software is addressed separately.) The report supplies market and vendor-level information on manufacturers’ revenue; ports shipped; average selling prices for both modular and fixed managed and unmanaged Ethernet switches (1,10, 25, 40, 50, 100, 200, 400, ≥800 Gbps); revenue split by market segments; as well as regional breakouts.
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