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The network switches market size is estimated to increase by USD 12.77 billion and grow at a CAGR of 6.78% between 2023 and 2028. Market expansion hinges on various factors, notably the rise in investments in data center construction, the burgeoning IT and telecommunication industry, and the increasing adoption of networking devices by SMEs. However, challenges loom large, such as the high operational costs of network switches, heightened vulnerability to cyber attacks, and the complexities in tracing network connectivity issues within network switches. These factors collectively shape the trajectory of the market, influencing its growth and presenting hurdles that need to be addressed to ensure sustained development and innovation in networking technologies. Navigating these challenges requires strategic measures to mitigate operational costs, enhance cybersecurity measures, and streamline troubleshooting processes. Ultimately, overcoming these obstacles is essential for fostering a robust and resilient market landscape, capable of meeting the evolving demands of businesses and ensuring the seamless operation of critical networking infrastructure.
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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 information centers around the world as well as the migration of many large businesses and government information centers from 10GbE to 40GbE/100GbE ethernet switches.
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The servers and storage providers segment was valued at USD 16.21 billion in 2018 and continued to grow until 2022. Inside information 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 from server and storage providers.
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North America is estimated to contribute 43% 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 information centers and renovating existing ones. Network switches will be more in demand as a result of the development of new information centers and the renovation of existing ones. The sharply rising volume of business and mobile information 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 information. 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.
The market is at the forefront of technological innovation, catering to diverse networking needs across various industries. Multiport network switch and LAN switch are integral components, facilitating seamless communication within local area networks (LANs) and industrial network environments, including rail and intelligent transportation systems. With the proliferation of smart devices and IoT applications, the demand for advanced networking solutions like industrial-grade Ethernet switches and smart configuration capabilities is on the rise. Data centers, operated by hyperscalers and data center operators, rely on robust networking infrastructure to support cloud migration and AI-driven applications. From managing LAN-connected devices to ensuring efficient data transfer between personal computer networking devices, switches play a central role in networking communication management, enabling the smooth operation of modern networks amidst the rapid evolution of technology.
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, 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 ones must be purchased to replace the older ones after each cycle. Hence, the operating costs for end users increase. Thus, the high operational costs 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 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.
Extreme Networks Inc. - The company offers omni switch 6360 stackable gigabit ethernet LAN switch which is ideally used for workstation, access point, IP telephony and critical Internet of things deployments.
The report also includes detailed analyses of the competitive landscape of the market and information about 15 market companies, 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 research report provides comprehensive data (region wise segment analysis), with forecasts and estimates in "USD Billion" for the period 2024 to 2028, as well as historical data from 2018 to 2022 for the following segments
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The market is experiencing dynamic growth driven by various factors. With the proliferation of smart devices, cloud migration, and the expansion of data center operators, demand for network infrastructure devices like routers, switches, and firewalls is soaring. However, challenges persist, including network misconfigurations and security threats from hackers. Network engineers and administrators play crucial roles in managing and securing communication infrastructure, especially in industrial and factory automation settings and intelligent transportation systems. As the demand for high-speed and reliable network connections rises, technologies like 100 GBE switching ports and managed switches gain prominence. With applications across industries ranging from healthcare to cryptocurrency mining, the market is poised for continued expansion amidst evolving technological complexities and security demands.
The market is experiencing rapid evolution driven by diverse technological advancements and industry demands. With networking communication management becoming increasingly complex, hyperscalers, enterprises, and small to medium-sized firms are seeking robust solutions to manage their data center servers, enterprise servers, and network infrastructure efficiently. From smart devices like smartphones, smart TVs, and autonomous vehicles to industrial-grade Ethernet switches for intelligent transportation systems, the market caters to diverse applications. Security remains paramount, with concerns over data breaches and security attacks driving demand for advanced features like managed L2/L3 configuration and smart configuration. As cloud adoption accelerates and data traffic increases, network switch technologies like PoE switches and 100 GBE switching ports play pivotal roles in ensuring reliable connectivity and high-performance network infrastructure for businesses worldwide.
Market Scope |
|
Report Coverage |
Details |
Page number |
168 |
Base year |
2023 |
Historic period |
2018 - 2022 |
Forecast period |
2024-2028 |
Growth momentum & CAGR |
Accelerate at a CAGR of 6.78% |
Market growth 2024-2028 |
USD 12.77 billion |
Market structure |
Fragmented |
YoY growth 2023-2024(%) |
6.23 |
Regional analysis |
North America, APAC, Europe, South America, and Middle East and Africa |
Performing market contribution |
North America at 43% |
Key countries |
US, China, UK, Germany, and India |
Competitive landscape |
Leading Companies, Market Positioning of Companies, Competitive Strategies, and Industry Risks |
Key companies profiled |
ALE International, Allied Telesis Holdings K.K., Arista Networks Inc., Broadcom Inc., Cisco Systems Inc., Dell Technologies Inc., D Link Corp., 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 forecast , market research and growth, Market forecasting, market report, Market growth inducers and obstacles, Fast-growing and slow-growing segment analysis, Market growth and Forecasting, COVID 19 impact and recovery analysis and future consumer dynamics, Market condition analysis for forecast period |
Customization purview |
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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 End-user
7 Market Segmentation by Technology
8 Customer Landscape
9 Geographic Landscape
10 Drivers, Challenges, and Opportunity/Restraints
11 Competitive Landscape
12 Competitive Analysis
13 Appendix
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