Forecast: 10GbE To Be The Top-Selling Ethernet Switch By 2016

Sales of 10-Gbit per second (Gbps) Ethernet switches are expected to reach $13 billion by 2016 and will constitute nearly half of a total $28 billion Ethernet switch market by then, a forecast from the research firm Dell'Oro Group states. And even as data center operators upgrade from 1-Gbit Ethernet switches to 10-Gbit Ethernet to handle exponentially larger volumes of network data traffic, sales of even faster 40-Gbit Ethernet and 100-Gbit Ethernet switches will also be picking up.

By 2016, sales of 40-Gbit Ethernet and 100-Gbit Ethernet products will amount to $3 billion, Dell'Oro said in its five-year forecast for the Ethernet switch market. The company, which is focused exclusively on networking and telecommunications equipment market research, expects the strongest growth in 10-Gbit Ethernet in 2013 and 2014 as enterprise data centers invest in the technology for server access through a mix of connectivity options for blade and rack-mounted servers.

Growth in 10-Gbit Ethernet deployments will be driven by continued adoption of virtualization, meaning servers will be running at higher utilization rates than will non-virtualized servers, said Alan Weckel, senior director at Dell'Oro Group. Another driver is expected to be the expected server refresh cycle prompted by the release of Intel's new Romley microprocessor platform, which will provide the faster server throughput that is needed for virtualization.

"Romley comes out in the first half of 2012, so 2012 is going to be the time that enterprises go through qualification tests of the new servers and new switches. The hockey stick up is [in] 2013," Weckel said.

Vendors in this burgeoning market include Alcatel-Lucent, Avaya, Brocade, Cisco Systems, Extreme Networks, Dell, HP, IBM, and Juniper Networks, but Weckel declined to say which specific vendors Dell'Oro thinks will benefit more from 10-Gbit Ethernet sales than others.

Vendors are seeing the same pick-up that Dell'Oro sees.

"This is the year of 10 gig," said Arpit Joshipura, chief marketing officer for Force 10 Networks, which was acquired by Dell in August 2011. "All of a sudden, this year we will see a lot more 10-Gbit deployments, and it's already starting to happen in our customer base."

Joshipura, who came to Dell from Force 10, said Force 10 developed the first 10-Gbit Ethernet switches about 10 years ago and would have hoped the technology would have caught on sooner, but is nonetheless happy that sales are picking up. However, while the rate of growth of 10-Gbit Ethernet switch sales is strong, Dell still sells far more 1-Gbit Ethernet switches than 10-Gbit Ethernet ones. Based on unit sales, he estimated 90% of sales are of the previous-generation 1-Gbit Ethernet products.

Likewise, Cisco Systems sees strong growth in the 10-Gbit Ethernet market and crossed the 10 million unit sales mark in December 2011, said Shashi Kiran, senior director of data center and enterprise networking at Cisco.

Kiran said Cisco currently enjoys a 76% share of the 10-Gbit Ethernet market and that, although the majority of its sales are also still of 1-Gbit Ethernet products, the growth rate for 10-Gbit Ethernet is higher. He also said that as more 10-Gbit Ethernet switches are deployed, Cisco is acting proactively to see what other points on a network may appear as "choke points" for the faster 10-Gbit Ethernet traffic.

Kiran also said unit sales of 10-Gbit Ethernet products are driven by declining prices, which makes it easier for customers to justify purchasing 10 Gbit Ethernet to replace 1 Gbit Ethernet on their networks.

Dell'Oro's Weckel provided some specifics: Across all vendors, the average selling price of a 10-Gbit Ethernet product was $388 per port in 2011, down from $818 per port in 2008.

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