Revenues from data center network equipment hit $13.7 billion in 2017: IHS Markit

Data center network equipment revenue reached $13.7 billion in 2017

According to IHS Markit, revenue from data center network equipment totaled $13.7 billion in 2017, an increase of 13% over 2016. The figure includes sales of data center Ethernet switches, application delivery controllers (ADCs), and software-defined enterprise WAN (SD-WAN).

Physical infrastructure investment continues to accelerate the rise in data center network equipment revenue in the short term. The market research and analysis firm expects that the impact of server virtualization will slow the market in 2018 and 2019, with less (but higher capacity) servers,causing the demand for data center Ethernet switch ports to decline, as well as the move to virtual ADCs.

"The adoption of lower-priced bare metal switches will cause revenue growth to slow," said Clifford Grossner, IHS Markit senior research director and advisor, cloud and data center research practice. "The ongoing shift to the cloud not only moves network equipment out of the enterprise data center, but also requires less equipment, as the cloud represents data center consolidation on a wide scale."

IHS Markit says that year-over-year, data center network equipment revenue grew in all regions. In 2017, North America and Europe, and Middle-East and Africa (EMEA) each saw a 10% increase. Asia Pacific (APAC) had a 23% rise, and Caribbean and Latin America (CALA) experienced a 2% rise. 25 Gigabit Ethernet (GbE) and 100GbE data center switching ports grew three-fold year-over-year, and developments are underway for new ports of 200GbE and 400GbE. The firm expects shipments to begin in 2019.

IHS Markit predicts that as migration from the enterprise dater center to the cloud causes SD-WAN revenue growth to slow, long-term growth in the data center network equipment market will decline to 6% in 2022. SD-WAN innovation will include a rise in analytics, with artificial intelligence (AI) and machine learning (ML) delivering multi-cloud connectivity.

For the full-year 2017, SD-WAN market revenue reached $444.1 million, and revenue is expected to total $3.6 billion by 2022, reports IHS Markit. Data center Ethernet switch revenue hit $11.4 billion in 2017, representing a 13% increase over the previous year. The firm says that bare metal switch revenue was up 60% year-over-year in the fourth quarter of 2017, while ADC revenue was down 5% year-over-year in 2017.

Quarterly worldwide and regional market size, vendor market share, forecasts through 2022, analysis and trends for data center Ethernet switches by category (purpose-built, bare metal, blade, and general purpose), port speed (1/10/25/40/50/100/200/400GE), and market segment (enterprise, telco, and cloud service provider) are provided by the IHS Markit data center networks intelligence service. Application delivery controllers by category (hardware-based appliances, virtual appliances), SD-WAN (appliances and control and management software), FC SAN switches by type (chassis, fixed), and FC SAN HBAs are also covered by the intelligence service. The service tracked vendors such as A10, ALE, Arista, Array Networks, Aryaka, Barracuda, Broadcom, Cavium, Cisco, Citrix, CloudGenix, Dell, F5, FatPipe, HPE, Huawei, InfoVista, Juniper, KEMP, Radware, Riverbed, Silver Peak, Talari, TELoIP, VMware, and ZTE.

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