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Data center switches stay resilient in tough times

Uncertain economic conditions will not do much to dampen growth prospects in the data center switch market, according to a leading analyst.

 

A recently published report from Dell’Oro Group concluded that the Ethernet Switch Data Center market will grow at a nearly double-digit CAGR between in the run-up to 2026, approaching $100bn in cumulative spending over the next five years. Dell’Oro said 400 Gbps speeds and higher are forecast to comprise half of the spending, with 800 Gbps surpassing 400 Gbps by 2025.

 

“Given the strong bookings and unprecedented levels of backlogs, we expect the demand in the market to remain strong in 2022 but sales performance will be determined by the supply environment,” said Sameh Boujelbene, Senior Director at Dell’Oro Group. “However, as we look into 2023, concerns started to arise regarding the sustainability of the demand level in the market. Those concerns are fueled by increased macro-economic uncertainties, which, combined with potential improvements in the supply situation, may put a break on the panic purchasing behavior we are currently experiencing in the market.

 

Boujelbene said she expects some slowdown in revenue growth in 2023, due in part to a tough comparison with 2022: “We expect the data center switch market to remain, for the most part, resilient to these macro-economic headwinds as the pandemic has amplified the importance of the network and accelerated digital transformation initiatives,” she added. “Additionally, our interviews with value-added resellers and system integrators revealed that many vendors have implemented some sort of non-cancellation policy for their orders which should provide confidence in a strong revenue outlook, at least through the first half of next year. Another reason that underpins our optimism about the long-term health of the market is the portion of spending driven by Cloud Service Providers. These are projected to comprise 60 percent of the spending on data center switches by 2026 and to drive the adoption of 400 Gbps, 800 Gbps, and 1600 Gbps speeds.”

 

The following live event will feature discussion of data center topics, among others.

Global Media Summit 2022 – NetEvents

 

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