MARKET INSIGHTS

The global data center networking market is expected to reach USD 35 billion by 2027, growing at a CAGR of 6.22% from 2022 to 2027. The data center network market comprises Ethernet switches, routers, ARM-based controllers, software-defined networking solutions, and other infrastructure. These infrastructures are critical for the quality transfer of data traffic. The traditional data center network architecture consists of a three-layer structure: Access, Aggregation, and Core Layer.

Rapid growth through establishing 5+ cloud regions by global operators year over year is boosting the spending on high-capacity and highly secure network infrastructure solutions. The adoption of SDN (Software Defined Networking) has gained significant traction in the past two years and will increase among data center operators and telecommunication service providers across developing markets in APAC and Europe. We believe that the spending on SDN will intensify with 5G deployments and edge facilities growing at a staggering CAGR of over 20% during 2022-2027.

The following factors are likely to contribute to the data center networking market growth during the forecast period:

• Adoption of Hyperconverged & Converged Infrastructure
• Growth in Software Defined Networking Adoption
• Increasing Adoption of High-Capacity Switches
• A Surge in Data Center Investments
• Growing Adoption of Big Data & IoT Solutions

KEY HIGHLIGHTS

• Increasing network traffic is driving innovations in the data center network space. Hyperscale data center operator Facebook is innovating its data center infrastructure through OCP every year. Facebook introduced Wedge 400 and Wedge 400G Top of the Rack switches in November 2021. Broadcom and Cisco ASICs power these switches.
• Cloud and content service providers will expand their network spending from core to edge data centers. In developing countries, on-premise migration to colocation facilities will reduce the spending on 1/10GbE switches and lead to a strong growth of 25/100GbE switches across modern data center environments.
• The growing adoption of cloud platforms for data storage across the globe will further fuel the adoption of network infrastructure in this sector, with the cloud sector being the dominant industry.
• The growing penetration of technological innovation is growing the need to deploy converged and hyper-converged network infrastructure in the market, helping data center operators save data center space and capital expenditure.

SEGMENTAL ANALYSIS

• The cloud segment will dominate the industry with a 62% Share in 2027
• APAC to witness an absolute growth of 50% during 2021-2027
• Data Center Ethernet switch spending to cross $70 billion during 2022-2027
• Over $110 billion will be spent procuring data center network infrastructure products by cloud, social media, and content service providers worldwide from 2022 to 2027.
• The growing need for data security and low latency services is fueling the demand for advanced network infrastructure solutions across industries such as BFSI, government, and telecom.
• Network infrastructure deployment among on-premise data center facilities is still identified worldwide among industry verticals such as government and BFSI sectors contributing a sizable share to the market's growth.
• Regarding Ethernet switches, 25GbE, and 100GbE network ports witnessed strong growth in 2021. As innovations in using 200/400GbE switch ports continue, vendors are working towards optimizing the network architecture with 800GbE switches.

KEY TRENDS IN 2022:

Software-Defined Networking (SDN) is in an Unstoppable Growth Trajectory

• Technological advancements have led to the installation of high-end networking solutions for supporting high bandwidth data traffic, and the need for virtualization of networking infrastructure has led to the adoption of Software Defined Networking (SDN).
• SDN helps the user to manage cloud-based data traffic, management of advanced technologies, agility in the data traffic, and other benefits.

Growing Hyperscale Data Center investments fueling the Adoption of High-Capacity Switches such as 100 GbE and Over

Hyperscale investments in developing regions such as the Middle East & Africa will lead to the procurement of network switches with multiple 25/40/100GbE switch ports. This scenario also holds true for the tier 2 data center market in European and Southeast Asian countries.

 GEOGRAPHICAL ANALYSIS

• The market in terms of investments for network infrastructure is dominated by countries such as the US, China, UK, Japan, and Germany, with investment in installing high-capacity switches with a capacity of 100 GbE and over across majorly followed by other emerging countries.
• Several countries have also started witnessing the adoption of SDN across the globe. For instance, Skanska Construction in the UK, Helvetia in Europe, and Isbank in Turkey have adopted software-defined networking solutions from different vendors operating in the market.

MARKET VENDOR ANALYSIS

• The demand for innovative data center network infrastructure solutions is growing among facilities with increasing AI, IoT, and big data workloads. This has prompted the vendors to continuously innovate their networking portfolio to match the environment offering higher efficiency, scalability, and reliability.
• Vendors are also innovating to offer switches with a capacity of 400 GbE in the coming years across several locations. 800 GbE switches are also expected to be launched in the coming years.
• In November 2020, Fujitsu and EdgeUno announced a partnership to deploy Fujitsu’s 1FINITY platform in EdgeUno’s data center interconnection network in Colombia.
• Some of the network infrastructure providers are also a member of the OCP community and are continuously innovating their offerings as per OCP standards.

Report Coverage:

• Data Center Networking Market Size and Growth Opportunities
• Major Trends and Drivers Impacting the Network Infrastructure Market
• Adoption by Product Type( Ethernet Switches, Routers, Storage Networking)
• Network Infrastructure Adoption by Several Industry Verticals
• Geographical Analysis Across 8 Regions And 20 Countries
• 20+ Market Vendors Profiles