Data Center Switch Market Overview
Data Center Switch Market is analysed to grow at a CAGR of 5.9% during the forecast 2022-2027 to reach $19.7 billion by 2027. The data center switch is emerging as a new class of switch since data center networking infrastructure become more disaggregated. Unlike the network switch for traditional three-tier hierarchical networks, data center class switches are designed to support data and storage for mission critical applications. With the rising demand for simplified data center management and automation system in various sectors, data center switch market has witnessed a market boom across the globe in a positive direction. Generally, the memory of data center switches are stored in content-addressable memory (CAM) as it returns the address where the data is stored. Data center switches shares information among different devices in the network with the help of Simple Network Management Protocol (SNMP). It allows devices to communicate even if the devices are different hardware and run different software. Programmable application-specific integrated circuit allow the data plane of switches to support new technologies, such as software-defined networking. This feature tends to enhance its market growth in the forecast period. Tree based network topology is used for Data center switch solutions which works efficiently in today’s cloud computing ecosystem, which brings significant growth in the Cloud-based services segment. Moreover, multi-chassis link aggregation (MLAG) takes the benefits of link aggregation and spreads them across a pair of data center switches to deliver system with high level redundancy as well network level resiliency. These features tend to enhance the global Data Center Switch Market size in the forecast period.
Data Center Switch Market Segment Analysis – By Type
By Type, the Data Center Switch Market Report is segmented into Core switches, Distribution Switches and Access Switches. Access Switches are analysed to hold highest share and grow at the highest CAGR of 8.6% during the forecast period 2022-2027 owing to the extensive network connectivity offered by these switches to distribution layers as well as different end-users. Access tier switches are the only ones that directly interact with end-user devices because it connects the majority of devices to the network and offers the highest port density among all other switch types. Despite the high port-count, Access switches usually provide the lowest throughput-per-port of all switches. For instance, most modern access switches provide a 10/100/1000 Mbps copper Ethernet connection to end devices. By contrast, core and distribution tier switches commonly use between 10 Gbps and 100 Gbps fiber-optic ports. Thus, these switches ensure connectivity between servers and networks. These factors further helps in the market growth of Access switches in the global Data center switches Market in the forecast period.
Data Center Switch Market Segment Analysis – By End-Use Industry
By End-Use Industry, the Data Center Switch Market Report is segmented into IT & Telecommunication, Government Organizations, Enterprise, Cloud-based Service Providers, BFSI and Others. Cloud-based Service Providers segment is analysed to hold the highest share with a growth rate of 8.1% during the forecast period 2022-2027. Data center switches offer various advantages to the Cloud-based service providers such as high-performance connectivity, constant uptime, high throughput and high reliability to manage vast amounts of data. Data center switches support an ever-increasing volume of information and offers faster data processing. These applications for Cloud-based services offers major boost to the demand of Data centre switches across the globe. Moreover, the major driving factor data center switch market growth in cloud-based services segment is the growing trend of adopting data analytics technology, scalable and cost-effective computing and high penetration of hybrid clouds. These features tend to boost the market growth of Data center switch in Cloud-based service providers in forecast period. According to India Brand Equity Foundation (IBEF) Reports, the Indian IT outsourcing services is expected to witness 6-8% growth during the forecast period. This increasing market growth of IT services in India will contribute significantly in the Cloud-based services sector for data center switch market.
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Data Center Switch Market Segment Analysis – By Geography
North America is analysed to be the major region with a share of 34% in 2021 for the Data Center Switch Market owing to the increasing IT industry requirements and rising adoption of new data center technologies. The market in the U.S. is expected to experience a greater traction as a significant number of organizations are likely to set-up for cloud services to save their upfront cost of building new data centres for business continuity. The U.S. currently has the highest number of data centres across the globe and is witnessing robust growth in terms of volume of big data and traffic owing to the increase in the number of data centres. For instance, in 2019, Google invested over $13 billion in data centres and offices in the United States. These investments brought significant growth in the demand of data center switches to maintain a high efficient data management system. Moreover, with the rising expansion of mobile broadband, growth in cloud computing, Big Data analytics and the development of Internet of Things (IoT) in North America region are the major factors which has brought a significant growth in the demand for new data center infrastructures in the region. This tends to further propel the Data Center switch market during the forecast period in this region.
Data Center Switch Market Drivers
Growing demand for simplified data center management and automation systems enhances the demand of Data Center Switches
The growing demand for simplified data center management and automation systems has brought a significant growth in the Data Center Switch Market. There has been a significant increase in data centers service providers across the globe. According to Enterprise Data Storage 2020, data storage needs were forecasted to reach 48,000 Exebytes by 2021 from 31,000 in 2020. This increasing need of data storage tends to drive the demand for Data switches to maintain a simplified data center management system in an Enterprise. For instance, according to Cisco Systems, the volume of big data alone in data center storage worldwide is expected to reach 403 exabytes by 2021. The data center architecture is changing with the increasing demand of data storage, which has brought the focus on offering integrated nodes, higher bandwidth speeds and more intelligent data center architecture. The increasing demand for storage solutions, owing to the Big Data and other computing and analytics platforms tend to be the primary reasons behind the development of data centres across the world. The introduction of the Internet of Things (IoT) has given rise to the generation of a vast amount of data. Big Data applications, such as business analytics, scientific computing, financial transactions, social networking sites and search engines are increasing rapidly. All these applications handle large datasets and require high-performance IT infrastructure to achieve fast-processing throughput. Thus, these demands will drive the market growth of data center switches in forecast period in global market.
Growth in cloud computing and edge computing propels the demand of Data Center switches
Growth in cloud computing and edge computing across the globe has been a major driving factor for the Data Center switch market growth. The major trend which is driving the market growth of data center switch is the cloud computing and its connection to billions of connected devices such as PCs, autonomous vehicles, virtual reality systems, and others. When smart devices are connected to the cloud, the data generated can be analysed in real-time, enabling these devices to be more useful data center products. The emergence of artificial intelligence, virtual reality systems, and 5G network has increased the number of data centres, which drives the growth of the data center switch market. Moreover, edge computing provides an alternative to the traditional data center paradigm by shifting data centers physically toward network through edge computing technology. Edge computing has emerged as an effective solution to store and access data that require faster response time and is required for a limited time period. Edge data centers have stringent, power, space and cooling requirements. Edge data centers, therefore, need to be equipped with advanced switching capabilities which can be achieved by Data center switch. This further drives the market growth of Data Center switch during the forecast period.
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Data Center Switch Market Challenges
High operational cost:
One of the major factors that hampers the growth of the Data Center Switch Market is the high energy cost of the data centers. The location of a data center is primarily dependent on the amount of energy sources available. As energy comprises of such a big part of the expenses, data centers located in various part of the world, need to take into consideration the energy prices in the area. For instance, Cisco Systems introduced their new data center switch named Nexus 9500 Data Center Switches with an average price range of $6,800. Further, additional operational cost and maintenance cost of different components such as servers and storages add a cost of $2,000 on an average. Thus, overall cost tend to be quite high which tend to restrain the Data center switch market growth. Moreover, energy prices in most of the metropolitan cities are comparatively higher than those of other cities. In addition, other operational costs such as machine, maintenance, labour and other is expected to bring major challenges in its adoption further restraining the growth of the Data Center Switch Market in the global market.
Data Center Switch Market Landscape
Product launches, acquisitions, and R&D activities are key strategies adopted by players in the Data Center Switch Market. The Data Center Switch top 10 companies includes Arista Networks, Bay Microsystem, Centec Networks, Cisco, Cumulus Networks, Dell, H3C Technologies, Edgecore Network, HPE, Huawei, Lenovo among others.
Acquisitions/Technology Launches/Partnerships
In February 2020, Arista Networks acquired Big Switch Networks, a network monitoring, and Software-Defined Networking developer. The acquisition was aimed to further strengthen the company’s network monitoring and observability suite delivered through Arista’s software platform CloudVision and Data Analysers capabilities. This acquisition brought new product line-up of data center switches with network monitoring capabilities.
In January 2019, Huawei launched their new data center switch that uses artificial intelligence (AI) chip named The Cloud Engine 16800 series. These data center switches use AI to improve the network operations and are also expected to provide an underlying network foundation for companies, in order to create new apps that utilize AI for network performance. This launch aimed to strengthen the data center switches application with the help of AI further enhancing its efficiency.
Key Takeaways
Rising demand of simplified data center management and automation system has brought a significant drive in the market growth of Data Center switches in the global market during the forecast period 2022-2027.
Ethernet technology is analysed to hold a significant share in 2021 owing to its operational flexibility anywhere from 10 Mbps to 400Gbps. For instance, most high-speed Internet home services are currently maxing out at about 60 Mbps for copper-based services, while Fibre services are now offering near gigabit Ethernet speeds. This tend to bring major growth in the demand of Ethernet technology further propelling the Data Center Switch Market growth.
Cloud-based Service Providers are expected to hold the highest market share in the forecast period among other end-use industries owing to the increasing enterprise applications which requires high-performance connectivity, constant uptime, high throughput and high reliability to manage vast amounts of data.
North America is analysed to hold the highest share in 2021 owing to the increasing IT industry requirements and rising adoption of new data center technologies. The market in the United States is expected to experience greater traction as a significant number of organizations are likely to set-up for cloud services to save their upfront cost of building new data centres for business continuity. These factors tend to boosts the Data center switch market growth in this region.
Relevant Report Titles:
Data Center Market
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