Data Center Networks Take Ethernet Switching to New Heights



The switching market experiences highs and lows depending on the server processor upgrade cycle and the nature of the economy at any given time, and despite economic uncertainty, the switching and switching markets. Ethernet routing continue to buzz.

Ethernet switching follows its general uptrend slightly as it moves to the right, increasing 7.5% in the third quarter ended September to just under $ 8.1 billion, according to counters of boxes of IDC. The data center router market, with those devices sold to both businesses and service providers, grew 4.7% during the period to just over $ 3.8 billion.

When it comes to Ethernet switching, IDC says sales of devices sold to the campus and branch office sectors have performed well, as have sales of Ethernet switches to hyperscalers and cloud builders. In the quarter ended September, the data center slice of the Ethernet switch market represented only 12.9% of the total ports delivered in the third quarter, which we estimate to be $ 207.6 million. ports in the world based on what IDC said in its most recent report and what it has said in recent quarters; as far as one can imagine, this included a total of 1,822.8 Eb / sec of cumulative switching capacity sold during the period. Do the math, and the world’s data centers consumed some 26.8 million Ethernet ports in the third quarter of 2021, up 8.7% year-on-year. The data center portion of the Ethernet market accounted for 56.7% of the nearly $ 8.1 billion in total Ethernet sales, representing just over $ 3.5 billion, an increase of 8.8% from compared to the previous year. Our assumption is that the data center was also an equally important part of the total Eb / sec switching bandwidth sold.

What price bandwidth?

We love to watch tech trends here at The next platform, and we use IDC’s public data for servers and switches to try to obtain a proxy for capacity pricing in the general service and switching markets.

Over the past few quarters, we’ve seen the 200 Gb / sec and 400 Gb / sec Ethernet switching markets take off, transitions that have taken longer than expected but are well underway. Most of this business is driven by hyperscalers and cloud builders, which grew 70.4% sequentially from Q2 2021 and port shipments increased 2.2x sequentially. Our guess – and we have to guess because IDC didn’t provide this information – is that the 200 Gb / sec and 400 Gb / sec devices generated just under $ 500 million in sales and were around 311 exabytes per second ( Eb / sec) of aggregate bandwidth across devices sold.

As far as we can understand, sales of 100Gbps Ethernet switches increased 13.8% to just under $ 2 billion, and some 8.4 million ports were sold to generate that revenue. , comprising 836.9 Eb / s of overall bandwidth. Sales of 50Gb / sec, 40Gb / sec, and 25Gb / sec devices continue to decline, and although cost per port is higher on faster ports, cost per bit moved has normalized and synchronized. for those slower chips, because you can see from this graph that we built:

As you can see, the cost per bit shifted continues to drop for 1Gb / sec and 10Gb / sec Ethernet switches, but they are perfectly acceptable devices for many campus and edge use cases and, in Like 10 Gb / sec devices, they are suitable for many data center use cases that are not bandwidth sensitive. If we do a little math on what IDC told the public, it looks like there was a total of 23.3 million ports shipped in the data center, an 8.7% increase from compared to the period of the previous year, and the revenue generated by the switches increased. from 8.8% to 3.6 billion dollars. Ethernet devices sold on campus and edge spaces accounted for 87.1% of ports shipped and 56.7% of revenue in Q3 2021, which is a good reminder that while data centers are generating port bandwidth and the density of the number of ports, there is a very long queue for these. technologies as they move to campus and then to the outskirts. For example, 1 Gb / s switches accounted for roughly 167.4 million ports and roughly $ 2.9 billion in revenue in the third quarter of 2021 – and this tech standard has been around since the summer of 1998, during the dot-com boom. .

It’s going to take a very drastic change in the world for all of these campus and edge networks to grow to even 10 Gb / sec, and given the desire of many companies to sell us metaverse or omniverse experiences, it would appear that even Les 100 Gb / sec or 1 Tb / sec links will be insufficient. There is a deep impedance mismatch between what the networking industry can offer in terms of switch and port bandwidth and what most businesses use to connect to the data centers where applications run.

The fact that there is over ten times the overall bandwidth in the Ethernet switch market as a whole also shows how much discussion there is between servers and their modular architectures and sometimes microservices to compose the pages. applications that are sent over these meager (and often fan out to routers providing wireless links).

You can have a 1 Gb / sec port for the price of a single entry to a good restaurant; a port operating at 100 Gb / sec or higher costs on the order of the entire bill for four people at a great restaurant including a few decent bottles of wine and a strong coffee after dessert. (We haven’t had much over the past couple of years, and it’s starting to annoy us a bit.) If you look at it on a cost-per-Gb / s basis, the overall Ethernet switch market was around the $ 4.44 per Gb. / sec of bandwidth. These 1 Gb / sec switches cost around $ 17.35 per Gb / sec, but 100 Gb / sec switches are down to $ 2.35 per Gb / sec, and the fastest 200 Gb / sec switches cost less than $ 2.00 per Gb / sec and the 400 Gb / sec switches are approaching $ 1.00 per Gb / s, averaging $ 1.60 per Gb / s over all bandwidths combined, as IDC grows currently on the market.

It’s hard to imagine, but the advent of 800 Gb / sec, 1.6 Tb / sec and 3.2 Tb / sec ports will continue to drive these costs down, and it won’t be long before the cost per. Gb / sec of bandwidth will be in the range of 25 to 30 cents. This relentless drop in costs is the only way the Metaverse or the Omniverse can ever be built, and if industry can’t meet it, then it won’t be built.

While the original design manufacturers have a fairly healthy share of the server market, they still have a relatively small (but growing) share of the Ethernet switch market, as IDC shows:

For some reason neither Hewlett Packard Enterprise nor Juniper Networks made this graph, but we have them in the graph we built from the IDC data:

Cisco Systems, a long-time owner of switching and routing but facing more than a decade of intense competition, held a 45.4% share of all switches in the third quarter, while Huawei Technology, the supplier major in computer hardware in China, had a 10.7 percent share of revenue. Arista Networks, the big newcomer to North America, held a 7.3% stake, followed by 6.2% of H3C, 5.8% of HPE and 3.2% of Juniper. It’s not clear why H3C and HPE are counted separately – they’re counted together by IDC when the market analyst talks about servers.


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