The market for Ethernet adapters with speeds of 25 gigabits (25GE) and faster deployed by enterprises, cloud service providers and telecommunication network providers at data centers topped $1 billion for the first time in 2019, according to Omdia.
The total Ethernet adapter market size stood at $1.7 billion for the year. This result was in line with Omdia’s long term server and storage connectivity forecast. Factors driving that forecast include the growth in data sets, such as those computed by analytics algorithms looking for patterns, and the adoption of new software technologies like AI and ML which must examine large data sets to be effective, driving larger movement of data.
“Server virtualization and containerization reached new highs in 2019 and drove up server utilization. This increased server connectivity bandwidth requirements, and the need for higher speed Ethernet adapters” said Vlad Galabov, principal analyst for data center IT, at Omdia. “The popularization of data-intensive workloads, like analytics and AI, were also strong drivers for higher speed adapters in 2019”
25GE Ethernet adapters represented more than 25 percent of total data-center Ethernet adapter ports and revenue in 2019, as reported by Omdia’s Ethernet Network Adapter Equipment Market Tracker. Omdia also found that the price per each 25GE port is continued to decline. A single 25GE port cost an average of $81 in 2019, a decrease of $9 from 2018.
Despite representing a small portion of the market, 100GE Ethernet adapters are increasingly deployed by cloud service providers and enterprises running high-performance computing clusters. Shipments and revenue for 100GE Ethernet adapter ports both grew by more than 60 percent in 2019. Each 100GE adapter port is also becoming more affordable. In 2019, an individual 100GE Ethernet adapter port cost $321 on average, a decrease of $34 from 2018.
“Cloud service providers (CSPs) are leading the transition to faster networks as they run multi-tenant servers with a large number of virtual machines and/or containers per server. This is driving high traffic and bandwidth needs,” Galabov said. “Omdia expects telcos to invest more in higher speeds going forward—including 100GE—driven by network function virtualization (NFV) and increased bandwidth requirements from HD video, social media, AR/VR and expanded IoT use cases.”
The Ethernet outlook:
Omdia expects Ethernet adapter revenue to grow 21 percent on average each year through 2024. Despite the COVID-19 lockdown, the Ethernet adapter market is set to remain close to this growth curve in 2020.
Ethernet adapters that can provide complete on-card processing of network, storage or memory protocols, data-plane offload or that can offload server memory access will account for half of the total market revenue in 2020, or $1.1 billion. Ethernet adapters that have an onboard field customizable processor such as a field-programmable gate array (FPGA) or system on chip (SoC), will account for slightly more than than a quarter of 2020 adapter revenue, totaling $557 million. Adapters that only provide Ethernet connectivity will make up a minority share of the market, at just $475 million.
Intel maintains lead:
Looking at semiconductor vendor market share, Intel held 24 percent of the 2019 Ethernet adapter market, shipping adapters worth $424 million in 2019. This represents a 2.5-point decrease from 2018 that Omdia attributes to the aging Intel Ethernet adapter portfolio which consists primarily of 1GE and 10GE adapters with Ethernet connectivity only. Intel indicated it will introduce adapters with offload functionality in 2020 that will help it remain competitive in the market.
Mellanox (now part of NVIDIA) captured 21 percent of the 2019 Ethernet adapter market, a 1-point increase compared to 2018. The vendor reported strong growth of its 25GE and 100GE offload adapters driven by strong cloud service provider demand and growing demand among enterprises for 25GE networking.
Broadcom was the third largest Ethernet adapter vendor in 2019, commanding a 14 percent share of the market, an increase of 3 points from 2018. Broadcom’s revenue growth was driven by strong demand for high-speed offload and programmable adapters at hyperscale CSPs.
In 2019, Microsoft and Amazon continued to adopt in-house-developed Ethernet adapters. Given their large scale and the high value of their high-speed offload and programmable adapters, the companies cumulatively deployed Ethernet adapters worth over $300 million. This made them the fourth and fifth largest makers of Ethernet adapters in 2019. As both service providers deploy 100GE adapters in larger numbers in 2020, they’re set to remain key trendsetters in the market.
Amazon AWS and Microsoft Azure continued to use in-house-developed Ethernet adapters. Given their large scale and the high value of their high-speed offload and programmable adapters, the companies cumulatively deployed Ethernet adapters worth over $300 million, according to Omdia. This made Microsoft and Amazon, respectively, the fourth and fifth largest makers of Ethernet adapters in 2019. As both service providers deploy 100GE adapters in larger numbers in 2020, Omdia expects them to continue to be key trendsetters in the market going forward.
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TMR Press Release edited by Alan J Weissberger followed by Coresite Data Center Talk & Tour for IEEE ComSocSCV and Power Electronics members
TMR Executive Summary and Forecast:
The global data center networking market is expected to emerge as highly competitive due to rising demand for networking components.
The major players operating in the global data center networking market include Hewlett Packard Enterprise, Cisco Systems, Inc., Arista Networks, Microsoft Corporation, and Juniper Networks. The key players are also indulging into business strategies such as mergers and acquisitions to improve their existing technologies. Those vendors are investing heavily in the research and development activities to sustain their lead in the market. Besides, these firms aim to improve their product portfolio in order to expand their global reach and get an edge over their competitors globally.
The global data center networking market is likely to pick up a high momentum since the firms are rapidly shifting to a more user-centric and data-oriented business. According to a recent report by Transparency Market Research (TMR), the global data center networking market is expected to project a steady CAGR of 15.5% within the forecast period from 2017 to 2025. In 2016, the global market was valued around worth US$63.05 bn, which is projected to reach around a valuation of US$228.40 bn by 2025.
On the basis of component, the global data center networking market is segmented into services, software, and hardware. Among these, the hardware segment led the market in 2016 with around 52.0% of share of data center networking market, as per the revenue. Nevertheless, projecting a greater CAGR than other segments, software segment is as well foreseen to emerge as the key segment contributing to the market growth. Geographically, North America was estimated to lead the global market in 2016. Nevertheless, Asia Pacific is likely to register the leading CAGR of 17.3% within the forecast period from 2017 to 2025.
Rising Demand for Networking Solutions to Propel Growth in Market
Increased demand for networking solutions has initiated a need for firms to change data center as a collective automated resource centers, which provide better flexibility to shift workload from any cloud so as to improve the operational efficiency.
Rising number of internet users across the globe require high-speed interface. Companies are highly dependent on the data centers in terms of efficiency to decrease the operational cost and improve the productivity.
Nevertheless, virtualization and rising demand for end-use gadgets are the major restrictions likely to hamper growth in the data center networking market in the coming years. Rising usage of mobile devices and cloud services also is hindering the steady strides in the data center networking market.
Popularity of Big Data to Add to Market Development in Future:
Rising popularity of big data and cloud services from the industry as well as consumer is anticipated to fuel the development in the global data center networking market. Advantages such as low operational costs, flexibility, better security and safety, and improved performance are likely to proliferate the market growth.
Disaster recovery and business continuity has resulted in simplification of data center networking by saving both money and time for companies. Financial advantages along with technology is likely to augur the demand in data center networking and cloud computing.
Companies are highly focused on data center solution providers to perform efficiently and effectively, with better productivity, high profit, and decreased prices. These goals require high-end networking technologies and upgraded performance server. It also needs a proper integration between simplified networking framework and server to reach the optimum level of performance.
The study presented here is based on a report by Transparency Market Research (TMR) titled “Data Center Networking Market (Component Type – Hardware, Software, and Services; Industry Vertical – Telecommunications, Government, Retail, Media and Entertainment, BFSI, Healthcare, and Education) – Global Industry Analysis, Size, Share, Growth, Trends and Forecast 2017 – 2025.”
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Coresite Data Center Tour:
On May 23, 2019, IEEE ComSocSCV and IEEE Power Electronics members were treated to a superb talk and tour of the Coresite Multi-Tenant Data Center (MTDC) in Santa Clara, CA.
CoreSite is a Multi-Tenant Data Center owner that competes with Equinix. CoreSite offers the following types of Network Access for their MTDC colocation customers:
•Direct Access to Tier-1 and Eyeball Networks
•Access to Broad Range of Network Services (Transit/Transport/Dark Fiber)
•Direct Access to Public Clouds (Amazon, Microsoft, Google, etc)
•Direct Access to Optical Ethernet Fabrics
CoreSite also provides POWER distribution and backup on power failures:
•Large Scale UPS
•A/B Power Delivery
….and PHYSICAL SECURITY:
•24/7 OnSite Security Personnel
•IP DVR for All Facility Areas
•Equipment Check-In/Out Process
•Access-Control Policies (Badge Deactivation, etc)
There are 28 network operators and cloud service providers that have brought fiber into the CoreSite Santa Clara MTDC campus. The purpose of that is to enable customers to share fiber network/cloud access at a much higher speed and lower cost than would otherwise be realized via premises-based network/cloud access.
While the names of the network and cloud service providers could not be disclosed, network providers included: Verizon, AT&T, Century Link, Zayo. In addition, AWS Direct Connect, Microsoft Azure ExpressRoute, Alibaba Cloud, Google Cloud interconnection and other unnamed cloud providers were said to have provided direct fiber to cloud connectivity for CoreSite’s Santa Clara MTDC customers.
Here’s how network connectivity is achieved within and outside the CoreSite MTDC:
The SMF or MMF from each customer’s colocation cage is physically routed (under the floor) to a fiber wiring cross-connect/patch panel maintained by Coresite. The output fibers are then routed to a private room where the network/cloud providers maintain their own fiber optic gear (fiber optic multiplexers/switches, DWDM transponders and other fiber transmission equipment) which connect to the outside plant fiber optic cable(s) for each network/cloud services provider.
The outside plant fiber fault detection and restoration are done by each network/cloud provider- either via a mesh topology fiber optic network or 1:1 or N:1 hot standby. Coresite’s responsibility ends when it delivers the fiber to the provider cages. They do, however, have network engineers that are responsible for maintenance and trouble shooting in the DC when necessary.
Instead of using private lines or private IP connections, CoreSite offers an Interconnect Gateway-SM provides their enterprise customers a dedicated, high-performance interconnection solution between their cloud and network service providers, while establishing a flexible IT architecture that allows them to adapt to market demands and rapidly evolving technologies.
CoreSite’s gateway directly integrates enterprises’ WAN architecture into CoreSite’s native cloud and carrier ecosystem using high-speed fiber and virtual interconnections. This solution includes:
-Private network connectivity to the CoreSite data center
-Dedicated cabinets and network hardware for routing, switching, and security
-Direct fiber and virtual interconnections to cloud and network providers
-Technical integration, 24/7/365 monitoring and management from a certified CoreSite Solution Partner