IHS Markit: Data Center and enterprise LAN SDN market totaled $4.4 Billion in 2017

Data Center & Enterprise SDN Hardware and Software Market Tracker from IHS Markit:

Highlights:

  • Global data center and enterprise LAN software-defined networking (SDN) market revenue—including SDN-in-use bare metal and branded Ethernet switches and SDN controllers—is anticipated to reach $15.8 billion by 2022.
  • Bare metal switch revenue came to $790 million in 2017, representing 26 percent of total in-use SDN-capable Ethernet switch revenue.
  • Data center SDN controller revenue totaled $1.2 billion in 2017, and is expected to hit $4 billion by 2022, when it will represent 17 percent of data center and enterprise LAN SDN revenue.
  • Cisco is number-one with 21 percent of 2017 in-use SDN revenue, VMware comes in at number-two with 19 percent, Arista at number-three with 15 percent, White Box at number-four with 12 percent and Huawei at number-five with 7 percent.

Notes:

  1.  White Box is No. 1 in bare metal switch revenue, VMware leads the SDN controller market segment, Dell owns 44 percent of  branded bare metal switch revenue in the second half of 2017, and HPE has the largest share of total SDN-capable (in-use and not-in-use) branded Ethernet switch ports.
  2. White box also ranked No. 1 in data center server revenue, pulling in 21 percent of the market in the first quarter, or $3.8 billion. Dell EMC dropped to second place in revenue at 20 percent ($3.6 billion), followed by Hewlett Packard Enterprise (HPE) at 18 percent ($3.2 billion).

IHS Markit analysis:

The data center and enterprise LAN market is maturing. In-use SDN revenue totaled $4.4 billion worldwide in 2017, and is expected to hit $15.8 billion by 2022. Innovations continue, with bare metal switch vendors announcing 400GE switches with new programmable silicon that incorporates an on-chip ARM processor to support artificial intelligence (AI) and machine learning (ML) and allows data plane protocols to be modified without changing silicon. Also of note, Edgecore Networks (Taiwan) contributed its 440GE switch design to the Open Compute Project (OCP).

SDN controllers for the data center also continue to add functionality, with increased support for interconnecting multiple on-premises data centers, and with support for interoperation between cloud service provider (CSP) data centers and enterprises as they build multi-clouds. Other notable enhancements include features that support container networking and integration with container management software such as Kubernetes.

Data center and enterprise LAN SDN is now mainstream and the market is expected to grow.

“Not all the $15.8 billion in revenue in 2022 is new. SDN-capable Ethernet switch revenue is existing revenue, and a portion of SDN controller revenue is displaced from the Ethernet switch market due to reduced port ASPs,” said Cliff Grossner, Ph.D., senior research director, IHS Markit. “Some network operators will elect to use bare metal Ethernet switches when deploying SDNs and rely on SDN controllers for advanced control plane features,” Cliff added.

About the report

The IHS Markit Data Center & Enterprise SDN Hardware & Software Market Tracker provides market size, market share, forecasts, analysis and trends for SDN controllers; SDN-capable bare metal Ethernet switches and branded Ethernet switches; and SD-WAN appliances and control and management. Vendors tracked include Arista, Aryaka, Cisco, Citrix, CloudGenix, Dell EMC, Fatpipe, HPE, Huawei, InfoVista, Juniper, NEC, Riverbed, Silver Peak, Talari, VMware, White Box, ZTE and others.

IHS Markit: Data center network equipment revenue reached $13.7 billion in 2017

Data center network equipment revenue, including data center Ethernet switches, application delivery controllers (ADCs) and software-defined enterprise WAN (SD-WAN), totaled $13.7 billion in 2017, increasing 13 percent over the previous year.

In the short term, investment in physical infrastructure is still driving data center network equipment revenue growth. However, in 2018 and 2019 the effect of server virtualization will slow the market, with fewer — but higher capacity — servers reducing the need for data center Ethernet switch ports, along with the move to virtual ADCs.


“The adoption of lower-priced bare metal switches will cause revenue growth to slow,” said Clifford Grossner, Ph.D., senior research director and advisor, cloud and data center research practice, IHS Markit. “The ongoing shift to the cloud not only moves network equipment out of the enterprise data center, but also requires less equipment, as the cloud represents data center consolidation on a wide scale.”

Data center network equipment highlights

  • Data center network equipment revenue was on the rise, year over year, in all regions: North America and Europe, Middle-East and Africa (EMEA) each increased 10 percent in 2017; Asia Pacific (APAC) was up 23 percent; and Caribbean and Latin America (CALA) rose 2 percent.
  • 25GE and 100GE data center switching ports increased three-fold year over year.
  • New 200/400GE developments are underway, and shipments expected to begin in 2019.
  • Long-term growth in the data center network equipment market is expected to slow to 6 percent in 2022, as SD-WAN revenue growth slows due to the migration from the enterprise dater center to the cloud.
  • SD-WAN revenue is anticipated to reach $3.6 billion by 2022; the next wave for SD-WAN includes increased analytics, with artificial intelligence (AI) and machine learning (ML) providing multi-cloud connectivity.

Revenue results from key segments

  • Data center Ethernet switch revenue rose 13 percent over the previous year, reaching $11.4 billion in 2017.
  • SD-WAN market revenue hit $444.1 million for the full-year 2017.
  • Bare metal switch revenue was up 60 percent year over year in the fourth quarter of 2017.
  • ADC revenue was down 5 percent year over year in 2017.

Research synopsis

The IHS Markit Data Center Networks Intelligence Service provides quarterly worldwide and regional market size, vendor market share, forecasts through 2022, analysis and trends for data center Ethernet switches by category (purpose-built, bare metal, blade, and general purpose), port speed (1/10/25/40/50/100/200/400GE) and market segment (enterprise, telco and cloud service provider). The intelligence service also covers application delivery controllers by category (hardware-based appliances, virtual appliances), SD-WAN (appliances and control and management software), FC SAN switches by type (chassis, fixed) and FC SAN HBAs.

Vendors tracked include A10, ALE, Arista, Array Networks, Aryaka, Barracuda, Broadcom, Cavium, Cisco, Citrix, CloudGenix, Dell, F5, FatPipe, HPE, Huawei, InfoVista, Juniper, KEMP, Radware, Riverbed, Silver Peak, Talari, TELoIP, VMware, ZTE and others.

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