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Cloud gives Ethernet switch market a hammering Featured

The business market for Ethernet switches appears to be feeling the effect of cloud computing, with sales in the first quarter of 2017 falling 21% year-on-year and 12% quarter-on-quarter, data from research firm IDC shows.

The fall was the biggest since 2015, and while earlier declines could be linked to events like federal elections, the most recent was systemic and driven by the fact that Australian businesses were moving workloads to the cloud.

The IDC report about the change, titled Worldwide Quarterly Ethernet Switch, Router and WLAN Trackers, covers eight regions and 60 countries, including Australia. The market is divided into product (Layer 2, ADC, high-end, mid-range, low-end, SOHO, Dependent APs, Controllers), deployment (service provider, enterprise, consumer), and measured in vendor revenue, value, and unit/port shipments.

IDC market analyst Ahmar Karimullah commented: "We're not seeing deployments of switches on premises like we did in the past.

"This has two effects: one is less switches in the enterprise, and the other is better utilisation of ports already deployed. Combined with SDN overlays, infrastructure is being more efficiently used".

IDC predicted flat growth to be flat right through to 2021 with a compound annual growth rate below 2%, meaning that the market would be about $700 million by then.

The IDC research found that wireless was becoming the default last-metre connection technology, with 5% year-on-year growth. The company forecast a 0.9% CAGR till 2021 with the market being worth $283 million by that year.

The 802.11ac Wave 2 technology was aiding vendors in sales as businesses sought better capacity for a workforce that was growing in its use of mobile. There was also interest in location-based services and their accompanying analytics.

"While increasing capacity is king, embedding of location- based services directly in the access point is very attractive for organisations wanting to understand both users and non-fixed devices connected to the network," said Karimullah.

The report said software was taking over wireless LANs and managing connected devices. With the rise of software-defined networking, IDC said it expected to see SDN controller software more integrated into WLAN offerings from vendors.

"Software-defined architectures help drive capacity utilisation; as we continue to see SDN deployed we expect this will impact on total ports deployed as infrastructure is more efficiently utilised," Karimullah added.


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Sam Varghese

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Sam Varghese has been writing for iTWire since 2006, a year after the sitecame into existence. For nearly a decade thereafter, he wrote mostly about free and open source software, based on his own use of this genre of software. Since May 2016, he has been writing across many areas of technology. He has been a journalist for nearly 40 years in India (Indian Express and Deccan Herald), the UAE (Khaleej Times) and Australia (Daily Commercial News (now defunct) and The Age). His personal blog is titled Irregular Expression.


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