Despite almost unfettered growth in technologies that allow employees to roam free while taking corporate networks and data along with them, most of the major changes (and nearly all the increases) in enterprise network spending during the next few years will be in the datacenter, not at the network’s edge, according to a new market-survey report from Dell’Oro Group.
The Layer 2/Layer 3 Ethernet switch market will be particularly skewed, as new and existing datacenters migrate core networks from standard 10 Gigabit Ethernet to 40 gigabit and 100 Gigabit Ethernet gear, according to a new Dell’Oro report.
Cloud computing has fundamentally changed the way corporate networks are designed by requiring multiple, high-bandwidth connections from business units at the edge of a network to a cloud provider.
Internal clouds, virtualization and increased focus on the efficiency of large datacenters have driven even mid-sized companies to consolidate IT staff and resources in large datacenters rather than distributing them in smaller pockets throughout the company.
Datacenters owned by cloud providers—which buy volumes of compute- and networking gear at far higher rates than most corporations—have become so numerous they skew the whole market toward high-capacity, high-cost networking gear, according to Alan Weckel, vice president at Dell’Oro and co-author of the report.
“In general, we are moving toward a period of data center consolidation and change, where there will be fewer, larger, data centers and the ownership of data center equipment will change,” Weckel was quoted as saying in the report. “The datacenter will be the site of almost all revenue growth during the forecast horizon, as the cloud forever changes how networks are built.”
Ten-gigabit-Ethernet ports account for about three quarters of the high-speed networking ports shipped, but should double to $42 billion by 2017, according to an April report from Infonetics.
The market for all L2/L3 network gear will grow to $25 billion by 2017, driven by sales 40- and 100-Gigabit Ethernet hardware that will top $4 billion by 2017, the Dell’Oro report predicted. The 10 Gigabit Ethernet gear (which has made up the bulk of corporate networks until now) will move almost entirely outside the datacenter as connections between corporate backbones and campus- or network-edge devices such as high-end workstations or wireless access points.
Ethernet remains so cost-effective that it will continue to be the primary big-data connectivity mechanism, which will drive sales of ultra-high bandwidth 40- and 100-Gigabit Ethernet connections rapidly during the next few years, according to a report from Heavy Reading.
The cost difference between 10- and 40- or 100-Gigabit Ethernet will decide just how fast that growth is. High-volume networking hardware buyers at commercial carriers expect the cost of a 10Gigabit Ethernet port to drop to about one sixth the cost of similar 100 Gigabit hardware, according to Heavy Reading.
At current prices, one 100 Gigabit Ethernet port costs the same as between seven and 10 ports of 10Gigabit Ethernet, the report said. The market for all wireless networking gear is also changing, though not with such dramatic changes in price or market share.
Wireless-equipment sales are rising at about 5 percent per year, according to Dell’Oro, but the market for Wireless Packet Core equipment designed to connect core datacenter networks to wide-ranging wireless or cellular WANS will nearly double to $6 billion in sales per year. That growth will be driven primarily by sales to carriers trying to meet demands for direct-network connections between corporate datacenter-based networks and the wide-ranging cellular networks that have effectively become WANs for mobile employees with smartphones, the report concluded.
The market for Wireless LANs, meanwhile, will grow 57 percent between now and 2017, driven by expansions in the WiFi networks supplied by carriers and service providers, cloud-managed wireless LANs, traditional 802.11AC wireless and increases in demand from end users running video over WiFi on BYOD hardware.