As the top three U.S. service providers--AT&T (NYSE: T), CenturyLink (NYSE: CTL) and Verizon (NYSE: VZ)--and their large enterprise clients ramp up their respective data center footprints to deliver a suite of managed and cloud-based services, a robust opportunity for Ethernet switch vendors is being created.
This data center drive, according to a new Dell'Oro Group report, will drive $28 billion in Layer 2-3 Ethernet switch sales in 2016, with the majority of the growth driven by sales of Ethernet switches for larger data center deployments.
Leading the revenue charge will be the sales of 10 Gigabit Ethernet (GigE) switches. However, Dell'Oro predicts that 40 GigE and 100 GigE will exceed $3 billion in revenues during the period.
"We expect the Ethernet Switch market to experience two significant years of market growth in 2013 and 2014 from the migration of servers towards 10 Gigabit Ethernet," said Alan Weckel, Senior Director of Dell'Oro Group. "We believe that in 2013, most large enterprises will upgrade to 10 Gigabit Ethernet for server access through a mix of connectivity options ranging from blade servers, SFP+ direct attach and 10G Base-T."
Weckel added that "in 2014, small and medium businesses will upgrade to 10 Gigabit Ethernet" and "towards the second half of the decade, 40 GE and 100 GE switches will be an important growth driver for the Ethernet switch market."
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