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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.
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APAC is estimated to contribute 34% to the growth of the global market during the forecast period.
Technavio's analysts have provided extensive insight into the market forecast, detailing the regional trends and drivers influencing the market's trajectory throughout the forecast period. North America leads the market, driven by widespread adoption across cloud service providers, telecoms, enterprises, and governments. The US's surge in new center constructions and renovations, including colocation facilities, caters to diverse business needs. Such centers rely on core, distribution, and access Ethernet switches for high-speed communication between servers, routers, and storage devices. Rising mobile and business traffic, fueled by social media use, necessitates enhanced connectivity. Increasing base and carrier station installations, especially in high-traffic areas like campuses and stadiums, amplify the demand for faster internet, propelling North America's market growth.
The market forecasting report includes the adoption lifecycle of the market research and growth, covering from the innovator’s stage to the laggard’s stage. It focuses on adoption rates in different regions based on penetration. Furthermore, the report also includes key purchase criteria and drivers of price sensitivity to help companies evaluate and develop their market growth and trends strategies.
Global Market Customer Landscape
Companies are implementing various strategies, such as strategic alliances, partnerships, mergers and acquisitions, geographical expansion, and product/service launches, to enhance their presence in the market.
Accton Technology Corp.: The company offers products such as High radix switch systems, which support a flexible choice of interface speed options from 25GbE to 50GbE, 100GbE, 400GbE and beyond for a wide coverage of use cases.
Market analysis and report of qualitative and quantitative analysis of companies has been conducted to help clients understand the wider business environment as well as the strengths and weaknesses of key market players. Data is qualitatively analyzed to categorize companies as pure play, category-focused, industry-focused, and diversified; it is quantitatively analyzed to categorize companies as dominant, leading, strong, tentative, and weak.
The market research report forecasts market growth by revenue at global, regional & country levels and provides an analysis of the latest trends and growth opportunities from 2018-2028
The data center switch market is experiencing unprecedented growth driven by escalating data transfer demands and evolving performance requirements. With bandwidth solutions and increased port speeds, enterprise data center operators seek 400G connectivity and advanced hardware solutions. Key trends include energy efficiency and the rise of software-programmable Trident 4-X7 Ethernet switch ASIC.
Cloud operators prioritize compatibility and open-source SONiC network operating system for streamlined data center operations. Digital infrastructure investment and carbon-neutral footprint are crucial for sustainable growth. Edgecore Networks from Taiwan offers a diverse product lineup catering to AI and ML workloads. Software-Defined Networking enhances network agility and centralized control, meeting changing application demands. In modern data center environments, virtualization and optimized resource utilization are paramount, serving SMEs and large enterprises alike, driving business objectives with seamless operations and high-capacity data center switches.
Market Scope |
|
Report Coverage |
Details |
Page number |
158 |
Base year |
2023 |
Historic period |
2018-2022 |
Forecast period |
2024-2028 |
Growth momentum & CAGR |
Accelerate at a CAGR of 5.72% |
Market Growth 2024-2028 |
USD 5.23 billion |
Market structure |
Fragmented |
YoY growth 2023-2024(%) |
5.0 |
Regional analysis |
North America, APAC, Europe, South America, and Middle East and Africa |
Performing market contribution |
APAC at 34% |
Key countries |
US, Canada, China, Germany, and UK |
Competitive landscape |
Leading Companies, Market Positioning of Companies, Competitive Strategies, and Industry Risks |
Key companies profiled |
Accton Technology Corp., Arista Networks Inc., 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. |
Market dynamics |
Parent market analysis, Market growth inducers and obstacles, Fast-growing and slow-growing segment analysis, COVID-19 impact and recovery analysis and future consumer dynamics, Market condition analysis for the forecast period. |
Customization purview |
If our report has not included the data that you are looking for, you can reach out to our analysts and get segments customized. |
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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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