Data Center SDN growing 65% this year

Driven by 10G, 25G switches, ADCs and network security appliances

SDN is exiting the hype phase and entering the usage stage. The data center software-defined networking market is expected to grow more than 65% in 2014 to about $3 billion, reflecting the maturity of architectures and the deployments under way, according to Dell’Oro Group.

Network security appliances and Ethernet switches will continue to comprise the majority of SDN’s impact, which is gaining a foothold outside of the major cloud providers, Dell’Oro notes. Application delivery controllers will also be impacted positively by SDNs as users demand more integrated features, such as security, on their devices when technology shifts like SDN emerge, the firm says:

In the Network Security and ADC markets this especially true due to how SDN has evolved to include network virtualization and the application layer and its potential to automate service chaining. Not only does SDN create the possibility of network service programmability and automation, but it also provides for the ability to manage flows through multiple network paths – which is relevant to Security and ADCs because flows can be programed to traverse different network paths to mitigate risk or improve performance. We think innovation in networking will be a good thing and the new features and functionalities developed from it will benefit these markets.

The evolution towards 10G in the enterprise and 25G Ethernet in the cloud will drive IT spending and enable vendors to increase market share, Dell’Oro says. Dell’Oro believes 25G will make its way into the enterprise as well, perhaps one switch silicon cycle after cloud deployments -- Broadcom just unveiled its Tomahawk chip which is optimized for 25G.

And there’s building momentum for 25G. Cisco, as expected, joined the 25 Gigabit Ethernet Consortium – a group started by Broadcom, Google, Microsoft, Arista and Mellanox – quietly back in August. Dell and Juniper joined as well.

From Mark Nowell, chair of the IEEE 25G Ethernet study group and a senior director at Cisco:

Cisco joined the 25G Ethernet Consortium to support its efforts to help promote standardization and improve Ethernet Interfaces. Cisco agrees that 25G Ethernet needs to be standardized and believes that IEEE is the right forum for standardization. In the past, Cisco worked through IEEE with other industry leaders to standardize 1GbE, 10GbE, 40GbE, and 100GbE, and we’ve continued that work by proposing that IEEE create a formal Study Group for 25 GbE. The proposal was voted on and accepted, so there is now an 802.3 25G Ethernet study group, chaired by Cisco, to consider market opportunities and requirements for a single-lane 25G Ethernet speed for server interconnects.

Dell’Oro, though, says 2014 will be the peak year for modular 10G port deployments as cloud providers move to 40/100G and enterprise campus use lags.

Dell’Oro is maintaining its 2% growth forecast in Ethernet switching for 2014, with the market expected to reach $23 billion. The firm believes the market will accelerate in 2015 after a pause induced by product transitions to Cisco’s Nexus 9000 and the lackluster adoption of 10G in the enterprise.

Data from other research firms tracking the SDN market range from $3.7 billion in 2016, to between $18 billion and $35 billion in 2018. Dell'Oro expects data center SDN to be a $10 billion market by 2018.

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