The following is a regular quarterly update from market watchers at the Dell'Oro Group (Redwood City, Calif.) on key networking and telecom markets it tracks.
10 Gbit Ethernet switching
The Ethernet switch market grew sequentially in 2Q12, in large part due to 10 GE strength. Revenues for 10 GE reached $1.8 billion, on sequential port-shipment growth of 13 percent. Top-of-Rack systems are the strongest growth driver when compared to other designs such as Modular and Blade Switches. We expect Top-of-Rack to continue to be a major contributor to 10 GE switch growth in the future.
The second quarter port shipment growth was driven by pent-up demand created in 1Q12, when Intel announced its new Romley server platform, as well as increased customer adoption of 10 GE for server access connections. We expect shipments to grow higher in the second half of 2012 as Romley drives the need for faster server connectivity with 10 GE ports.
Click on image to enlarge.Storage area networks
In 2Q12 the total SAN market, which includes Fibre Channel switches and adapters, saw revenues grow to $642 million. Over the past eight years, Fibre Channel switch revenue in the second quarter has declined two percent on average when compared to the first quarter. However, this year Fibre Channel revenues grew an uncharacteristic one percent in 2Q12.
Fibre Channel Switch revenue strength was driven by higher average selling prices that resulted from a migration towards higher speeds and to new products. The ramp of 16 Gbps switches was the primary driver to 2Q’s increased pricing.
2Q12 marked the fourth quarter of 16 Gbps Fibre Channel products shipping for revenue. In the second quarter, not all vendors were shipping 16 Gbps devices. We expect the adoption of 16 Gpbs to accelerate in the first half of 2013 as more vendors introduce 16 Gbps devices.
Click on image to enlarge.