These are the findings of market researcher Dell'Oro Group, which noted that growth in the market from 2003 to 2008 was across all segments -- low-end unmanaged switches, mid-range fixed PoE devices and high-end modular systems. The market nearly doubled in that time period, from $10.7 billion to $18.5 billion.
But since the market recovered in 2010 from the recession of 2008-2009, it shifted toward a single segment of customer deployment: the data center.
IN PICTURES: Ethernet everywhere!
"We believe this shift to be a fundamental transition and we predict that products deployed in the data center will be the growth engine of the Ethernet switch market over the next few years," Dell'Oro said in a statement. "We see intelligence moving back from the edge and into the data center core for easier management particularly as enterprises virtualize and outsource to the cloud."
The shift has significant ramifications for Ethernet switching vendors, Dell'Oro asserts. With the migration in the data center toward 10 Gigabit Ethernet for server access, vendors are coming out with unique products optimized for those, and other specific deployments.
Vendor market shares will be affected by these disparate requirements, and many will be forced to specialize in only certain deployment locations or partner with other vendors to offer customers complete Ethernet switching portfolios, Dell'Oro says.
"Manufacturers can no longer develop a switch for one customer deployment location and modify it into a second location and expect success," the firm states.
And vendors that currently have more exposure in the data center will likely increase their Ethernet switch market share as the overall market becomes more data center focused, Dell'Oro notes.
The Layer 2/3 data center switching market grew just under 6% from 2010 to 2011, to $6.6 billion, according to Dell'Oro. The top three vendors were Cisco, HP and Dell.
The entire Layer 2/3 Ethernet switch market was $19.8 billion in 2011, essentially flat with 2010 but up 31% from 2009, according to Dell'Oro.