The data center is evolving pretty much as expected, with bigger, faster pipes driving the biggest growth, according to new vendor market share and forecast reports from Infonetics Research focused on SAN and data center network equipment. But that may not last, according to the consultancy, as virtualization, cloud computing, and the emergence of fabrics and convergence all contend for a bigger slice of the data center pie.
While data center equipment sales in the first quarter surged 17% year over year, that was still a 6% drop from the fourth quarter. Data center network equipment revenue for the first quarter came in at $2.2 billion. Spending through 2013 will be very uneven, as both data center operators and service providers are at different stages in their upgrades, and some are starting to wind down their current investment cycles, says Sam Barnett, directing analyst for data center and cloud at Infonetics.
Both Fibre Channel (FC) and Ethernet products benefited from the unquenchable thirst for speed, growing 52% and more than 300%, respectively. However, that isn't quite as impressive as it sounds, Barnett cautions. Overall sales are expected to be relatively flat through 2016 as data centers switch to 16-bitG Fibre Channel, he says. Ethernet hypergrowth was driven by purpose-built Ethernet switches, which grew by just 1% quarter over quarter, but more than 300% year over year--by far, the fastest-growing category. "10 Gig is the real star there," says Barnett. "We predict that by 2016, 10-Gig ports will account for almost 85% of purpose-built switches for the data center."
To put the numbers into perspective, Barnett says, all Ethernet switches account for only 2.9% of the overall market, but more than 50% in the data center. Both 4-Gbit and 8-Gbit FC products will see negative or modest growth over the forecast period, he says. Brocade, which kick-started the 16-Gbit FC market last year, dominates with 70% revenue market share of the FC SAN switch space. The storage networking market was flat sequentially, at $1.3 billion, while Fibre Channel-over-Ethernet converged network adapters shot up 22% from the fourth quarter. Cisco continued to lead the data center network equipment market, with HP and F5 battling it out for second place.
One of the biggest surprises of the study was the huge drop in WAN optimization appliances, which tumbled 20% quarter over quarter. The surprise wasn't that the segment was down, but by how much, says Barnett. "We've been predicting that WANop, especially for hardware appliances, is largely saturated, for the last three quarters," he says. "Nobody anticipated a 20% falloff for the first quarter."
What's behind the drop? A number of factors, including virtualization, integration, the time customers take to evaluate and make purchases, and the emergence of integrated products. WAN optimization is also relatively expensive, so the midmarket can't afford it, and the Fortune 1,000 market is largely saturated.
Looking beyond the numbers, Barnett says, enterprises need to pay attention to the implications of virtualizing the network. According to a new study from InformationWeek, 72% of organizations report that their data centers are at least 25% virtualized. Half say they've virtualized 50% of their servers, and 26% have virtualized at least 75% of their data center infrastructure.
While there are some advantages to concepts like software-defined networking (SDN), he says, he also cautioned that it's a most overhyped concept. "You can't take 25 years of routing and switching know-how ... and throw it out the window." Even the concept of cloud computing is just a repackaging of ideas that first emerged in the 1970s with IBM's 370 mainframe and remote computing, he says.
He declares the most exciting development to be the concept of convergence--bringing together storage, compute and the network. "The concept of fabrics ... unification, convergence ... is very important, the flattening of the network, pulling cost and complexity out of the data center," he says.