Cisco Grows Share of Expanding Ethernet Switch Market: IDC
Cisco Systems grew its dominant market share in the global Ethernet switch market in the first three months of the year, and also saw its share of the booming 10 Gigabit Ethernet switch market rise, according to market research firm IDC.
Overall, the rapid adoption of cloud computing technologies in the data center is helping fuel growing demand for Ethernet switching in the network, IDC analysts said.
In a report released May 21, the analysts said that in the first three months of the year, revenue in the worldwide Ethernet switch market (Layer 2/3) hit $5.1 billion, a 7.4 percent jump over the same period in 2011. The global router market grew 2.8 percent in the first quarter, they said.
Rohit Mehra, director of IDCs Enterprise Communications Infrastructure practice, said changing computing models at enterprises is driving the healthy Ethernet switch space.
"The positive market performance in the first quarter of 2012 speaks well to the network infrastructure needs of enterprise IT as it embraces cloud technologies," Mehra said in a statement. "While Gigabit Ethernet is alive and well at the network edge supporting a myriad of applications, it is 10GbE along with the emerging 40GbE that will continue to drive incremental growth in data center and campus core deployments."
Enterprises are looking to leverage both 10GbE and 40GbE in their data centers as they try to manage the rapid increase of traffic running over their networks. Sales of 10GbE switches jumped 20.6 percent over the first quarter last year, with 10GbE port shipments growing to a record 2.8 million in ports, according to IDC. The Layer 4-7 switching revenues grew 21.1 percent, to $388.7 million.
Cisco, long the market leader in networking, last year saw its core switch and router businesses come under attack from Hewlett-Packard, Juniper Networks and others, who pitched themselves as more open and cost-effective alternatives to Cisco equipment. Analysts also questioned whether Ciscos efforts over the previous years to expand into new markets diverted the tech vendors attention away from its networking businesses and gave its rivals room to grow.
However, as part of a painful restructuring that included the laying off thousands of employees and shedding some businesses, Cisco executives laid out five pillars that the company would focus its efforts on, including the networking business.
Those efforts seem to be working. Ciscos share of the Layer 2/3 Ethernet switch market hit 65.1 percent, a jump over the 63 percent it held in the first quarter last year. In the 10GbE space, Ciscos share hit 69.4 percent.
HP came in a distant second in the overall Ethernet switch space, with 8.3 percent market share. That was followed by Alcatel-Lucent at 2.6 percent, Juniper at 2.4 percent and Huawei Technologies at 2.1 percent.
Worldwide, Latin America, North America and the Asia-Pacific region saw the strongest revenue growth, while the EMEA region, consisting of Europe, the Middle East and Africa, saw relatively soft growth at 4.2 percent, IDC analysts said.
"The Ethernet switch market continued to build on its momentum established in the second half of last year. The year-over-year growth in 1Q12 was the highest since the fourth quarter of 2010," Petr Jirovsky, senior research analyst in IDC's Networking Trackers Group, said in a statement. "The overall market drivers, such as the proliferation of video traffic on the network, are mitigating to a large extent the increased macroeconomic uncertainty and weakness in the public sector in many regions."
IDC is not the only analyst firm to see strong growth in Ethernet switching. In March, analysts from the DellOro Group said that 10GbE Ethernet revenue this year should grow to more than a third of the overall Layer 2/3 switch market.
We believe we are still in the early stages of server access from 1 Gigabit Ethernet to 10 Gigabit Ethernet, Alan Weckel, senior director at DellOro, said in a statement at the time. We expect the first significant ramp of this migration to start in the second half of 2012 and continue through 2013. We expect server vendors will ramp Intels Romley chipset quickly in the second half of 2012. Most new high-end servers will, for the most part, be 10 Gigabit Ethernet going forward.
Romley refers to Intels Xeon E5-2600 processors, eight-core chips that were introduced in March and which target servers that run in cloud and virtualized environments, or in large, converged data centers.
Weckel also said that the industry will see a mix of connectivity options ranging from blade servers, SFP+ direct attach and 10G Base-T during 2012. We also expect vendors will most likely specialize in a particular area within the data center, or have a large portfolio of products to address customer requirements, as vendors migrate servers from 1 Gigabit Ethernet to 10 Gigabit Ethernet in significant volumes and look toward 40 Gigabit Ethernet to connect these switches to the core.