Firm believes purpose-built switches will eat into share
Talk about peeing on the campfire: just as Cisco rolls out its new and enhanced switches for the data center, Oppenheimer & Co. issues a report proclaiming share losses in this market for Cisco in 2011.
The firm notes that data center is the fastest growing part of the switching market, accounting for about 51% of the market’s overall growth from 2009 to 2011. And within that niche, demand is growing for specialized switches optimized for dense virtualization and low latency.
This is creating fragmentation and disruption among vendors of these specialized switches and those trying to retrofit “best effort” general purpose switches for data center duty, Oppenheimer states. As a result, opportunities are opening up for non-incumbent vendors targeting these specialized niches.
Cisco plays in all three switching categories: dense virtualization, low latency and general purpose, which helps account for Cisco’s 77% share of the $3.8 billion data center switching market in 2009, Oppenheimer notes. In dense virtualization switching it competes with Force10 and BLADE; in low latency with Force10, Arista and Juniper; and in general purpose with HP, Juniper and Brocade.
Oppenheimer expects the market to grow to $5.9 billion by 2011. Top-of-rack switches will grow fastest, almost doubling from $987 million in 2009 to $1.8 billion in 2011. End-of-row switches will grow slower, from $2.2 billion in 2009 to $3.2 billion in 2011. And blade switches will pull up the rear, growing from $607 million in 2009 to $847 million in 2011.
Oppenheimer expects these trends to challenge Cisco rather than pad its 77% data center switching share. Initially, the company’s share will grow to 79% of data center and 72% of overall switching in 2010, due to “strong catch-up spending,” the firm notes. But Cisco’s data center switching growth will slow in calendar 2011 due to intense competition from specialized vendors – and, presumably, the best efforts of general purpose players.
This will push Cisco’s data center and overall market share down to 73% and 69%, respectively, according to Oppenheimer. Due to these factors, Oppenheimer believes 2011 Wall Street estimates for Cisco are too aggressive.
More from Cisco Subnet:
All of today’s Cisco news and blogs
Cisco wants to be the standard
Wendell Odom: Tons of Answers at Networkers
Forget Apple. RIM should fear Cisco’s Cius
Why You Can No Longer Afford to Consider Presence an Optional Component
The Next Generation of Routing Architecture
Hands on with the Android tablet “Cius” that Cisco announced at Cisco Live
High Availability, Headless Communists, and Other Random Thoughts from Networkers
Lieberman Cybersecurity Bill Could Change IT Procurement
Like RSS readers? Subscribe to the Cisco Subnet RSS feed
Follow all Cisco Subnet bloggers on Twitter.Jim Duffy on TwitterFollow
