The Ethernet switch market is undergoing a technological transformation in the data center as virtualization changes where and how applications are connected to end users. New network topologies are driving entirely new switching platforms.
Over the next five years, vendors will expand and consolidate as the battle for supremacy in data center networking intensifies. The result is that there has never been a better time for new entrants or a better opportunity for existing vendors to gain share.
Two major trends will forever change the Ethernet switch market: a significant technology shift to 10 Gbit Ethernet for server access, and the emergence of powerful new cloud computing giants such as Google.
Until the past few years, almost all traffic flowed from server to user, commonly referred to as north/south traffic. Virtualized traffic and current applications now predominantly communicate server to server, commonly referred to as east/west traffic. The change in traffic patterns requires networks with fewer layers and higher bandwidth to handle east/west traffic flows.
The cloud will be highly disruptive to the Ethernet switch market. The impact of each type of cloud on the market is unique.
Google shows that a large enough enterprise focused on the data center can create an in-house team, leverage merchant silicon and design houses from Asia, and produce an Ethernet switch that meets its needs. By doing so, Ethernet switch spending moves from the Ethernet switch vendor to the component manufacturer, thus removing some sizeable revenue from the Ethernet switch market. Enterprise spending, which comprises the bulk of the Ethernet switch market, is not affected.
Projecting the likely size of outsourced cloud providers is challenging, but looking at Google, one could tell that the impact on how enterprises purchase Ethernet switches will be large. We believe the impact of cloud vendors moving to in-house switches has the potential of impacting the Ethernet switch market by over $1 billion a year in the next five years.
It is clear that, in five years, data centers will look significantly different from today’s data centers. How users access data centers will be forever changed, as will the way enterprises deploy and manage them. Vendor share and the vendors themselves will look different. The evolution towards 10 GE and large data centers is an opportunity. Vendors that understand and embrace the technology change of virtualized data centers running at 10 GE or higher speeds have the opportunity to see their share of IT dollars increase and improve their market position in the next several years.
Alan, you write that "It is clear that, in five years, data centers will look significantly different from today’s data centers"...but nowhere in your article you even give a hint what would be different...I remained puzzled why the 10 GE switching technology would change, or are you taking about different business landscape only? remaining confused, Kris
David Patterson, known for his pioneering research that led to RAID, clusters and more, is part of a team at UC Berkeley that recently made its RISC-V processor architecture an open source hardware offering. We talk with Patterson and one of his colleagues behind the effort about the opportunities they see, what new kinds of designs they hope to enable and what it means for today’s commercial processor giants such as Intel, ARM and Imagination Technologies.