Cisco Dominates Fast-Growing Ethernet Switch Market: IDC

Cloud computing, virtualization and mobility are among the drivers fueling the increasing demand for 10GbE switching, according to IDC analysts.

Cisco Systems continues to be the dominant player in a growing Ethernet switch market that is being fueled by such trends as cloud computing, virtualization and mobility, according to IDC analysts.

In the second quarter, revenue for Ethernet switches worldwide jumped 8.5 percent, to $5.5 billion, while 10 Gigabit Ethernet switch sales increased 22.9 percent from the same period last year. In addition, 10GbE port shipments hit a record 3 million in the quarter, leading the overall market growth.

The strong performance of Ethernet switches-which saw revenue increases in every region, including economically troubled Europe-is an indication that networking continues to play a key role in new IT infrastructure deployments, according to Rohit Mehra, director of the Enterprises Communications Infrastructure business at IDC.

"10GbE along with the emerging 40GbE Ethernet switch segments are leading the market to higher levels, clearly proving the point that growth in applications, virtualization and mobility has to be looked at in conjunction with the underlying wired infrastructure in data centers and campus deployments," Mehra said in a statement Aug. 23.

IDC's findings fall in line with numbers that analysts at the Dell'Oro Group rolled out Aug. 15. The Dell'Oro analysts said the Layer 2/3 Ethernet switch market will grow to almost $25 billion in 2016, with the key driver being Ethernet switches designed for large data center deployments.

In addition, by 2015, 10GbE switch sales will make up the bulk of Ethernet switch revenue, while revenue in the 40GbE and 100GbE switch space will reach almost $3 billion by 2016. By that time, 40GbE and 100GbE revenue will account for more than 20 percent of the market. Some networking vendors, including Cisco and Extreme Networks, already have offerings in this segment, according to Dell'Oro.

"The cloud is changing how networks are built and who owns data center equipment," Alan Weckel, senior director of Dell'Oro, said in a statement.

Weckel said that data centers will evolve to become "similar to 'clouds,' in which any server can connect to any resource within a data center. It is unclear whether enterprises will tend to own and run their own clouds, or whether they will outsource their clouds."

Greater outsourcing will only ramp up the competition between networking switch vendors, given that the number of data centers will be reduced. It also will mean fewer-but larger-data center deals, he said.

"Concurrently, we are moving toward abstracting the network from the user/application, which is changing where some of the engineering effort in data center switching is being deployed," Weckel said.

According to IDC's numbers, Cisco remained the top Ethernet switch vendor, holding 62.1 percent of the market, a drop from the 62.6 percent it held during the same period in 2011. Next up was Hewlett-Packard, at 9.2 percent; Alcatel-Lucent, at 3.07 percent; Huawei Technologies, at 2.85 percent; and Juniper Networks, at 2.48 percent.

Cisco's share of the 10GbE switch market in the second quarter was 66.8 percent.

Demand for all Ethernet switches continues to grow, and even offsets global economic problems, according to Petr Jirovsky, senior research analyst in IDC's Networking Trackers Group.

"Even the Gigabit Ethernet segment showed strength in 2Q12, with over 55 million ports shipped in the quarter, and market revenue growing 6.5 percent from the previous quarter," Jirovsky said in a statement. "The overall market drivers, such as 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."