A couple of Dell'Oro market reports came in recently that paint a bright landscape for Ethernet switching and core routing, two markets integral to Cisco. The Layer 2/3 Ethernet switch market is expected to approach $25 billion in 2017, driven by 40/100G for data centers.
This is up from $20.9 billion in 2012, representing a compounded annual growth rate of 3.7%.
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And behind all of that is the cloud, which Dell'Oro analyst Alan Weckel says "forever changes how networks are built." Data centers will consolidate to fewer, larger facilities, presumably as hosting sites for the IT operations of companies that adopt cloud computing services.
Weckel says this will change who owns - and buys -- data center equipment. Essentially, Dell'Oro believes the private enterprise data center may be phasing out. And in doing so, it may shake up the Ethernet switch hierarchy - or not:
Single vendor wins at these large data centers will be sufficient to shift market share in the overall market as well as vendor ranking in individual segments. We expect many large-magnitude Cloud wins throughout the forecast period and believe a dominant Cloud provider could apply significant pricing pressure on this market and the vendor(s) it selects
As 40/100G moves in, 10G moves out to the surrounding campus, onto high-end workstations and 802.11ac wireless access points, Dell'Oro forecasts. But before that, both Crehan Research and Infonetics Research expect healthy demand for 10G switch ports near-term.
The core service provider router market, meanwhile, is expected to see strong demand in 2014 and 2015 as backbones are upgraded with recently-introduced core routers, like Cisco's CRS-X, Juniper's T4000 and PTX, and Alcatel-Lucent's 7950 XRS. Cisco is also believed to be working up a Juniper PTX knock-off called the CTR.
Recent technological advancements have increased the capacity of core routers by up to 4X, Dell'Oro says, perhaps pushing current cores to the regional edge, where localized traffic loads demand higher capacity. As a result, the market for these products will experience near double-digit growth over each of the next three years, reversing a 10% decline in 2012, Dell'Oro says.
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