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Data Center Upgrades Spur Surge In Network Equipment

Infonetics research says cloud computing will fuel large gains in the 10G Ethernet and storage markets through 2014.

The planets are aligning for data center network growth as virtualization, explosive data growth, and other cloud computing needs will result in a big surge in data center upgrades, according to a report from Infonetics Research.

For equipment providers, there are several positive emerging indicators, including a rising demand for 10G Ethernet switches. Infonetics said data center switch ports reached 14% penetration in the third quarter, higher than in the total Ethernet switch market.

Rapidly falling prices are expected to drive 10G port penetration in data centers to about 50% by 2014, the market research firm said this week in its report on data center networks.

"A new round of data center upgrades is underway," said Infonetics analyst Matthias Machowinski, who added that the growth is "driven by virtualization, surging amounts of data, the growing need for storage, under-investment in 2009, and renewed life in the financial sector." He predicted the worldwide data center network equipment market will hit $7.6 billion in 2010, representing 67% growth in 2010. Machowinski is directing analyst of Infonetics enterprise networks and video practice.

Telecom carriers are driving much of the application delivery controller market, which is paced by F5, although Citrix is enjoying a 25% growth and has passed Cisco for the first time, according to the report.

At the same time, storage area networks are also enjoying a surge in demand and, according to analyst Michael Howard, the demand is driven by the deployment of "gargantuan gigabytes of storage each quarter." Howard noted that much of the surging growth in video and data content in global data centers is generated by consumers.

Howard is predicting the worldwide SAN equipment market will more than double to $6.6 billion by 2014.

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