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The network switches market size is estimated to grow at a CAGR of 6.13% between 2022 and 2027. The network switches market size is forecast to increase by USD 10,802.22 million. The growth of the market depends on several factors, including increasing investments in data center construction, the growing IT and telecommunication industry, and the growing adoption of networking devices by SMEs.
This network switches market report extensively covers market segmentation by end-user (servers and storage providers, telecommunication providers, and enterprise and industrial usage), technology (100 GbE, 10 GbE, 40 GbE, and 100 MbE, and 1 GbE), and geography (North America, APAC, Europe, South America, and Middle East and Africa). It also includes an in-depth analysis of drivers, trends, and challenges. Furthermore, the report includes historic market data from 2017 to 2021.
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The increasing investments in data center construction are notably driving the market growth, although factors such as high operational costs of network switches may impede the market growth. Our researchers analyzed the data with 2022 as the base year, along with the key drivers, trends, and challenges. A holistic analysis of drivers will help companies refine their marketing strategies to gain a competitive advantage.
The increasing investments in data center construction are notably driving market growth. Data centers are now an essential component of every business. Numerous businesses have been forced to construct their own data centers or rent data center space due to the enormous growth in the amount of data being generated. In the upcoming years, the demand for data centers will further increase due to the growing popularity of cloud computing.
Several firms are investing in the construction of new data centers. For example, NTT Ltd. declared in May 2022 that NAV1A, its first data center, would open in India on the premises of its brand-new hyper-scale data center. With a total area of more than 2.5 million square feet (232,258 m2) and 220 MW of facility power, NTT currently operates 12 data center locations across the country. Similarly, three brand-new cloud regions in the Asia-Pacific were announced by Google Cloud in August 2022. These regions will offer new opportunities for cloud computing and service sales to international channel partners. The aforementioned investments in the building of data centers show that there will be a rise in the demand for various networking devices, such as network switches, which will propel the growth of the global market during the forecast period.
The growing data volumes across enterprises are an emerging trend in the market. IT infrastructure has undergone a significant change as a result of the widespread adoption of cutting-edge technologies like edge computing, AI, IoT, 5G, and ML applications. A number of industries, including manufacturing, retail, logistics, aviation and defense systems, healthcare and life sciences, finance, smart agriculture, and smart infrastructure are embracing these technologies. A number of industries have also seen significant growth due to 5G technology's faster data transmission rates and all-encompassing internet access.
Data loads have significantly increased as a result of the growing customer and application bases. These require more sophisticated network switches because they require higher bandwidth transfers of these data volumes to servers and storage systems. By 2025, the total amount of data is anticipated to reach 463 exabytes. Furthermore, the number of IoT devices will also increase by 75 billion by 2025, adding to the data loads on regional servers and data center operations. Therefore, the market opportunities presented by each of these trends will grow for network switch vendors. Hence, such factors will boost the growth of the global market during the forecast period.
The high operational costs of network switches are major challenges impeding market growth. Network switches are extremely useful for networking operations. However, the price of research and development is quite high. The cost of these switches rises as they get more features like processors, memory, cabling, and connectors. Small 5-port models of contemporary hardware from larger producers like Intel and Broadcom typically cost USD 100, but a 24-48 port switch can easily cost thousands of dollars.
Additional security features, which are one of the most important features in the current generation of network switches, increase the cost of a network switch. Moreover, industrial switches need routine maintenance to ensure continuous operation because they last ten years as opposed to 4-5 years for network switches. Furthermore, it results in high replacement costs because new network switches must be purchased to replace the older ones after each cycle. Hence, the operating costs for end users increase. Thus, the high operational costs of network switches can become a major challenge for the growth of the global market during the forecast period.
The report includes the adoption lifecycle of the market, 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 growth strategies.
Global Network Switches Market Customer Landscape
Vendors 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.
Extreme Networks Inc. - The company manufactures wired and wireless network infrastructure equipment and develops software for network management. The key offerings of the company include 5720 series high-capacity multi-gigabit switches which automate network operations, simplify network provisioning and enhance security.
The report also includes detailed analyses of the competitive landscape of the market and information about 15 market vendors, including:
Qualitative and quantitative analysis of vendors 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 vendors as pure play, category-focused, industry-focused, and diversified; it is quantitatively analyzed to categorize vendors as dominant, leading, strong, tentative, and weak.
The market share growth by the servers and storage providers segment will be significant during the forecast period. The servers and storage providers segment accounted for the highest share of the global market in 2022. The growth of this market segment is being driven by the increase in the construction of cloud data centers around the world as well as the migration of many large businesses and government data centers from 10GbE to 40GbE/100GbE ethernet switches.
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The servers and storage providers segment was valued at USD 15,457.74 million in 2017 and continued to grow until 2021. Inside data centers, network switches are used to connect various devices to the same network. Network switches link servers and build a network of shared resources that enables information sharing between various devices. These switches provide the physical port capacity and port throughput required to handle both east-west and north-south traffic flows. They support connectivity via the common Local Area Network (LAN) Ethernet protocol as well as Storage Area Network (SAN) protocols like legacy Fibre Channel and Fibre Channel over Ethernet. As a result, during the forecast period, the segment in the global market will grow due to the rising demand for network switches from server and storage providers.
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North America is estimated to contribute 40% to the growth of the global market during the forecast period. Technavio’s analysts have elaborately explained the regional trends and drivers that shape the market during the forecast period.
Due to the increased use of data centers run by businesses, governments, telecommunications companies, and cloud service providers (CSPs), North America currently controls the majority of the global market. During the forecast period, the US will also probably increase the market share of the region by building new data centers and renovating existing ones. Network switches will be more in demand as a result of the development of new data centers and the renovation of existing ones. The sharply rising volume of business and mobile data traffic is another significant factor contributing to North America's rising demand for network switches. Social media platforms like Facebook, Instagram, and Snapchat have seen an increase in popularity and usage, which has led to the production of massive volumes of data. Businesses are placing numerous base and carrier stations, particularly on college campuses, technology parks, stadiums, and other locations with a high user density, in order to improve connectivity across networks. This is expected to create higher demand for faster internet connections, which will drive the growth of the market in North America during the forecast period.
In 2020, the outbreak of COVID-19 hampered the growth of the market in North America. However, lockdowns were lifted in 2021, owing to the implementation of large-scale COVID-19 vaccination drives across North America. This led to the resumption of business activities by vendors. Moreover, the number of data centers in the region is also expected to rise in the coming years. For instance, in March 2021, Google announced plans to invest over USD 7 billion in offices and data centers across the US. Thus, such factors will boost the growth of the market in North America during the forecast period.
The network switches market report forecasts market growth by revenue at global, regional & country levels and provides an analysis of the latest trends and growth opportunities from 2017 to 2027.
Technavio categorizes the global network switches market as a part of the global electronic components market within the global electronic market. The global electronics market includes manufacturers of communications equipment, technology hardware storage and peripherals, electronic equipment and instruments, electronic components, consumer electronics, industrial electronics products, and electronic manufacturing services. Our market research report has extensively covered external factors influencing the parent market growth during the forecast period.
Network Switches Market Scope |
|
Report Coverage |
Details |
Page number |
157 |
Base year |
2022 |
Historic period |
2017-2021 |
Forecast period |
2023-2027 |
Growth momentum & CAGR |
Accelerate at a CAGR of 6.13% |
Market growth 2023-2027 |
USD 10,802.22 million |
Market structure |
Fragmented |
YoY growth 2022-2023(%) |
5.51 |
Regional analysis |
North America, APAC, Europe, South America, and Middle East and Africa |
Performing market contribution |
North America at 40% |
Key countries |
US, China, India, UK, and Germany |
Competitive landscape |
Leading Vendors, Market Positioning of Vendors, Competitive Strategies, and Industry Risks |
Key companies profiled |
ALE International, Allied Telesis Holdings K.K., Arista Networks Inc., Broadcom Inc., Cisco Systems Inc., D Link Corp., Dell Technologies Inc., DrayTek Corp., Extreme Networks Inc., Fortinet Inc., Fujitsu Ltd., Hangzhou Hikvision Digital Technology Co. Ltd., Hewlett Packard Enterprise Co., Huawei Technologies Co. Ltd., Juniper Networks Inc., Netgear Inc., Panasonic Holdings Corp., PLANET Technology Corp., Ruijie Networks Co., and TP Link Corp. Ltd. |
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, and 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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