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The data center switch market size is projected to increase by USD 5.23 billion at a CAGR of 5.72% between 2023 and 2028. The market growth analysis depends on several factors, including the need for simplified management and automation, the increase in demand for InfiniBand switches, and the growth of cloud service providers.
The market growth and forecasting report includes key player's detailed analyses of the competitive landscape of the market and information about 20 market companies, including Broadcom Inc., Cisco Systems Inc., CommScope Holding Co. Inc., Dell Technologies Inc., Extreme Networks Inc., Fortinet Inc., FS.COM Inc., Hewlett Packard Enterprise Co., Huawei Technologies Co. Ltd., Juniper Networks Inc., Larch Networks, Lenovo Group Ltd., Marvell Technology Inc., NADDOD Pte. Ltd., NVIDIA Corp., QSFPTEK Tecnology Co. Ltd, Ruijie Networks Co., and VMware Inc. Additionally, Arista Networks Inc. company offers products such as Arista 7800R3 series, Arista 7500R3 series, Arista 7280R3 modular series, Arista 7280R3 series, Arista 7020R switch, Arista 7300X3 series, and Arista 7050X4 and 7358X4 series.
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The need for simplified management and automation is the key factor driving the market expansion. As these centers become more complex and critical to business operations, organizations are seeking solutions that streamline management tasks, enhance efficiency, and provide greater automation. Modern data centers host a diverse range of applications, services, and workloads. Managing the networking infrastructure within these complex environments can be challenging. Therefore, switches equipped with advanced management and automation features help simplify the operation and maintenance of the network. Furthermore, intent-based networking (IBN) is an emerging approach that leverages automation to translate high-level business policies into network configurations.
Additionally, automated processes can help enforce security policies and compliance standards consistently across the network. This is essential for protecting sensitive data and ensuring that the network adheres to industry regulations. Thus, the demand for simplified data center management and automation is driven by the need for agility, efficiency, and the ability to adapt quickly to changing business requirements, which is expected to drive the market during the forecast period.
Growing demand for Internet connection is the primary trend in the market. As more devices, users, and applications connect to the Internet, the need for robust and scalable data center networks becomes increasingly critical. With the proliferation of online services, social media, video streaming, and cloud-based applications, there is a continuous increase in traffic. Such witches are instrumental in managing the high volumes of data created by the aforementioned traffic between servers, storage systems, and the broader Internet.
Furthermore, the expansion of cloud computing services, including infrastructure as a service (IaaS), platform as a service (PaaS), and software as a service (SaaS), relies on such networks. Additionally, the increase in remote work and the need for remote access to applications and data are expected to contribute to higher demand for Internet connectivity. Thus, as the demand for Internet connectivity continues to grow, this will become increasingly important in ensuring the efficiency, reliability, and scalability of data center networks, which is expected to drive market growth during the forecast period.
High operational cost is a major challenge that affects market expansion. Without slowing down, they can move enormous amounts of data in milliseconds. They are, consequently, extremely suitable in applications such as gaming, video editing, and cryptocurrency mining, which require high bandwidth and low latency. However, the cost of research and development in data center switches is relatively high. With additional features such as processors, memory, cabling, and connectors, the price of these switches increases. Modern hardware from larger manufacturers such as Intel and Broadcom typically costs USD 100 for small 5-port models and can easily increase to thousands of dollars for a 24-48 port switch.
However, as technology gains wider adoption, the cost of the switches decreases. The price of a data center switch increases when it incorporates additional security features, which are one of the most crucial components in the current generation. Additionally, since new switches must be purchased to replace the older ones after each cycle, it leads to high replacement costs. This drives up the operating expenses of end-users. Large-scale businesses that extract more data prefer to install durable switches, but their prices are quite high. Thus, the high operational costs will become a major challenge for the expansion of the market during the forecast period.
The market share by the core switches segment will be significant during the forecast period. In data center networking, core switches play a crucial role in connecting various distribution switches and providing high-speed, high-capacity connectivity for data traffic within the data center. There are two types of core switches found in data center environments such as chassis-based core switches and fixed-configuration core switches.
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The core switches segment showed a gradual increase in the market share of USD 5.08 billion in 2018. Moreover, chassis-based core switches are modular devices that consist of a chassis or a mainframe and multiple line cards or modules. Fixed-configuration core switches have a fixed number of ports and are not modular, such as chassis-based switches. Further, the expansion of the market is closely tied to the capabilities and advancements of core switches. As these continue to evolve to meet the demands of modern applications, services, and connectivity requirements, the segment of the market will grow significantly during the forecast period.
The ethernet?segment will account for the largest share of this segment.?Ethernet technology has experienced significant growth in the market due to its versatility, scalability, and widespread adoption. Ethernet is based on IEEE standards, providing a standardized and interoperable networking solution. Furthermore, as the growth continues to evolve, Ethernet remains a constant technology that can support the high-performance networking demands of modern applications, services, and workloads, resulting in a large contribution to the growth of the market in focus. Thus, the demand for Ethernet will continue to grow, which will fuel the development of the segment and market during the forecast period.
1 Executive Summary
2 Market Landscape
3 Market Sizing
4 Historic Market Size
5 Five Forces Analysis
6 Market Segmentation by Type
7 Market Segmentation by Technology
8 Customer Landscape
9 Geographic Landscape
10 Drivers, Challenges, and Trends
11 Vendor Landscape
12 Vendor Analysis
13 Appendix
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