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Ethernet switch sales sizzle

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The server market may have stalled a bit as Intel, AMD, IBM, Oracle, and Fujitsu work through various stages of processor transitions, but the Ethernet switch market is going gangbusters.

According to the box counters at IDC, the worldwide market for Layer 2 and 3 switching gear that adheres to the Ethernet protocol accounted for $5.52bn in revenues in the second quarter as companies begin the transition to from Gigabit to 10 Gigabit Ethernet switching in the data center – that's an increase of 8.5 per cent year-over-year across all Ethernet port speeds.

At Layers 3 through 7 in the network stack, however, vendors sold $376.1m worth of gear, down 5.6 per cent and reflecting a move toward flatter and fatter Layer 2-3 networks for many workloads rather than the tiered networks that have been common for the past two decades.

In the quarter ended in June, IDC reckons that Gigabit Ethernet switches collectively accounted for 55 million ports and revenues rose 6.5 per cent. And if you don't yet think that 10GbE ports are taking off, know that shipments rose above 3 million ports in the second quarter and revenues for switches driving those ports were up 22.9 per cent – and that's as the per-port costs of a 10GbE switch and their companion server adapter cards have come down radically in the past year.

With the latest Intel Xeon E5 processors, server makers are also putting 10GbE ports on their motherboards, essentially making the 10GbE networking free as 100Mbit and Gigabit were ahead of them, driving adoption in the data center during the dot-com boom and the ensuing bust.

Cisco Systems is still the king of Ethernet, slicing itself a 62.1 per cent piece of the Layer 2-3 Ethernet switch pie in the second quarter – even though that represents a half-point smaller share. The company's piece of the 10GbE switch pie was higher, though, at 66.8 per cent in the second quarter, and close to the 70 per cent level that the company likes to have with emerging technologies.

HP was the number two Ethernet switch vendor, but far behind Cisco with only 9.2 per cent of that $5.52bn in dough from Q2 sales. Alcatel-Lucent ranked third with 3.07 per cent share, followed by emerging Chinese giant Huawei Technologies with its 2.85 per cent share.

Upstart Juniper Networks, which is going through switch and router product transitions right now as Cisco was doing two years ago, garnered 2.48 per cent of the Q2 pie. IBM, which has its own Networking division thanks to the acquisition of Blade Network Technology a few years back, got lumped into the Others category, as did Dell with its PowerConnect and Force 10 products.

By region, Ethernet switch sales were up 17 per cent in Latin America and 15.4 per cent in Asia/Pacific, with EMEA being a drag with only 5.2 per cent revenue growth and North America also lowering the class average a bit with its 5.9 per cent growth. ®

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