According to a recently published report by Dell'Oro Group, the Layer 2-3 Ethernet switch market is expected to approach $25 billion annually in 2018.
"The Ethernet Switch market remains robust, but will become increasingly dependent on the data center for growth," said Alan Weckel, vice president of Ethernet Switch market research at Dell'Oro Group. "As employees rely on mobile devices and WLAN connectivity more than ever and campus switch revenues continue to decline, the data center will become the main driver over the next several years."
Two major upgrade cycles in the data center will be happening, he says. The first is the enterprise migration towards 10 Gigabit Ethernet which Dell’Oro anticipates will start in 2015. The second, carrying greater implications for future growth in switching, is the cloud upgrade to 25 Gigabit Ethernet which should begin by 2016.
Large data center operators, particularly Microsoft, have voiced the need for a 25-Gbps Ethernet specification as a way to neatly aggregate server Ethernet interconnects at speeds greater than 10 Gbps into a 100 Gigabit Ethernet backbone. The formation of an industry consortium seems to have spurred action for an official standard (see "IEEE launches 25 Gigabit Ethernet Study Group").
The report also indicates that 25 Gigabit Ethernet will be a major driver for growth in data center switching and will help propel 100 Gigabit Ethernet volumes. Pricing on 25 Gigabit Ethernet and the associated 100 Gigabit Ethernet ports in the data center will be one of the largest growth factors overall as we look towards the second half of the decade, the Dell’Oro analyst asserts.
Given the move to higher speeds, the report also indicates that 10 Gigabit Ethernet modular port shipments will be declining as data center and campus core markets move towards higher speeds.
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