Sunday, March 12, 2023

IDC: Worldwide Ethernet switch market continues strong growth

Worldwide Ethernet switch revenues grew 22.0% year over year in the fourth quarter of 2022 (4Q22) to $10.3 billion and grew 18.7% for the full year 2022 to $36.5 billion, according to the recently published International Data Corporation (IDC) Worldwide Quarterly Ethernet Switch Tracker and Worldwide Quarterly Router Tracker.

The total worldwide enterprise and service provider (SP) router market recorded $4.6 billion in revenue in 4Q22, a 0.7% year-over-year increase. For the full year, router market revenues increased 3.9% to $16.5 billion. Worldwide Ethernet switch revenues 18.7% for the full year 2022 to $36.5 billion while the service provider router market grew 3.9% to $16.5 billion

Ethernet Switch Market Highlights

  • The Ethernet switch market's growth of 22.0% year over year in 4Q22 builds on growth of 23.9% in the third quarter of 2022. 
  • Annual growth of 18.7% for the full year builds on the market growing 9.7% in 2021 compared to 2020. In the fourth quarter, the Ethernet switch market showed strength across both the datacenter and non-datacenter segments of the market. 
  • Revenues in the non-datacenter/enterprise campus and branch segment grew 22.6% year over year in 4Q22, while port shipments rose 18.0% year over year. 
  • For the full year, non-datacenter Ethernet switch revenues rose 15.7% while port shipments grew 12.2%. 
  • Revenues in the datacenter portion of the market rose 21.2% year over year in 4Q22, while port shipments increased 17.3%. 
  • For the full year, datacenter ethernet switch revenues rose 22.6% year over year and port shipments increased 12.2%.
  • Market revenues for 200/400 GbE switches rose more than 300% for the full year in 2022 but were flat at 0.7% sequential growth from 3Q22 to 4Q22. 
  • 100GbE revenues increased 18.7% year over year in 4Q22 and rose 22.0% for the full year. 25/50 GbE revenues increased 30.1% year over year in 4Q22 and rose 29.8% for the full year.
  • Revenues for 1GbE switches rose 21.4% year over year in 4Q22 and grew 12.6% for the full year. 10GbE switches rose 1.0% year over year in the quarter but were flat at 0.4% for the full year.
  • 2.5/5GbE switch revenue – also known as multi-gigabit Ethernet switches – rose 122.1% year over year in 4Q22, with 53.1% sequential growth from 3Q22 to 4Q22.

"Strong growth in the Ethernet switch market continued in the fourth quarter of 2022, driven by a variety of trends, but the most significant factor was the continued easing of component shortages and a reduction in supply chain disruptions," said Brad Casemore, research vice president, Cloud and Datacenter Networks, IDC. "Meanwhile, enterprises, service providers, and hyperscalers continue to build out Ethernet switching capacity, reinforcing the importance of connectivity and network infrastructure in today's digital-first business world."

Router Market Highlights

  • The service provider segment, which includes both communications SPs and cloud SPs, accounted for 73.7% of the market's total revenues. 
  • The service provider segment of the market decreased 4.0% year over year in 4Q22 and finished the full year up 1.3%. 
  • Revenues in the enterprise segment account for the remaining share of the market and rose 17.1% year over year in the quarter and increased 12.9% for the full year.
  • From a regional perspective, the combined service provider and enterprise router market in the U.S. rose 18.5% year over year in 4Q22 and was up 17.0% for the full year. 
  • In Canada ,the router market increased 12.3% in the quarter and rose 1.4% for the full year, while in Latin America the market rose 5.2% in 4Q22 and was up 16.7% for the full year. 
  • In the Asia/Pacific region (excluding Japan & China), the market increased 0.7% in the quarter, but fell 3.9% for the full year. 
  • Japan's market was up with 5.6% growth in 4Q22 and a 0.3% increase for the full year. 
  • The People's Republic of China market decreased 18.9% in the quarter and 6.7% for the full year. 
  • Revenues in Western Europe decreased 1.0% in 4Q22 but rose 5.2% for the full year, while the Central and Eastern Europe market was down 17.1% in the quarter and 21.2% for the full year. 
  • The Middle East & Africa region was up 5.2% in the quarter and grew 3.7% for the full year.

2022 Global Provider Carrier Ethernet LEADERBOARD

Vertical Systems Group announced that seven companies achieved a rank on the 2022 Global Provider Ethernet LEADERBOARD as follows (in order based on retail port share as of year-end 2022): Orange Business (France), Colt (U.K.), Verizon (U.S.), AT&T (U.S.), BT Global Services (U.K.), NTT (Japan) and Lumen (U.S.). This industry benchmark for multinational Ethernet network market presence ranks companies that hold a 4% or higher share of billable retail ports at sites outside of their respective home countries.

The following nine companies attained a 2022 Challenge Tier citation (in alphabetical order): Cirion (Argentina), Cogent (U.S.), Global Cloud Xchange (India), GTT (U.S.), SingTel (Singapore), T-Systems (Germany), Tata Communications (India), Telefonica (Spain) and Vodafone (U.K.). The Challenge Tier includes companies with share between 2% and 4% of this defined market.

“The market for global Ethernet ports expanded as enterprises continue to add sites to their existing networks,” said Rick Malone, principal of Vertical Systems Group. “DIA additions outpaced other Ethernet services, as enterprises transition to hybrid SD-WAN architectures worldwide.” 

Some highlights

  • Rank positions are unchanged for the top four Global Ethernet Providers on the 2022 LEADERBOARD – Orange Business, Colt, Verizon and AT&T. Share differentials remain slim between these leading providers based on latest port share results.
  • The next three LEADERBOARD positions have shifted due to Lumen’s divestiture of Latin American assets, which included a sizable Ethernet base.
  • As a result, Lumen drops from rank position #5 to the #7 position. BT Global Services advances to the #5 position from #6, and NTT moves up to the #6 position from #7.
  • The 2022 Challenge Tier expands from eight to nine companies with the addition of Cirion, which acquired global Ethernet ports from Lumen.
  • Our research shows a steady uptick in the number of net new Global Provider Ethernet ports installed during 2022.
  • Global Ethernet providers cite geopolitical disruptions, supply chain concerns, and increased competition as growth inhibitors for this segment.
  • Five of the seven Global Provider Ethernet LEADERBOARD companies have attained MEF 3.0 Carrier Ethernet certification as follows (in rank order): Orange Business, Colt, Verizon, BT Global Services, and Lumen.

Dell'Oro: Ethernet adapter market rose 40% in 2022

The Ethernet Adapter market grew 40 percent in 2022. However, we expect the market to moderate in 2023, as server vendors lower their inventory levels in anticipation of lower enterprise demand, and the major cloud service providers undergo a capex digestion cycle, according to a new report from Dell'Oro Group.

“The Ethernet Adapter market achieved record revenue growth in 2022, primarily from the shift of product mix to higher speed ports and higher prices,” said Baron Fung, Research Director at Dell’Oro Group. “However, the market is changing rapidly, as the market shifted from a supply-constrained environment to one that is oversupplied with vendors reducing inventory levels. Enterprise demand is expected to slow this year, and we anticipate some major cloud service providers will undergo a server digestion cycle. However, there are opportunities in the market, as server access speeds continue to increase, and broader Smart NIC adoption is expected in 2023,” added Fung.

Additional highlights from the 4Q 2022 Ethernet Adapter and Smart NIC report include:

  • The Ethernet Adapter market is forecast for 13 percent revenue growth in 2023.
  • 100 Gbps and higher speed ports could account for nearly half the market in 2023.
  • Smart NIC open vendors such as AMD, Intel, and NVIDIA in a position to capture opportunities in the Cloud and Enterprise markets this year.

OFC attracted 11,500 participants and 515 exhibiting companies

Last week's OFC 2023 in San Diego attracted over 11,500 participants and 515 exhibiting companies.

"One of OFC's highlights was live interoperability demonstrations from leading optics companies running over OFCnet," said OFC chairs Chris Cole, Coherent Corporation; Ramon Casellas, Centre Tecnològic de Telecomunicacions de Catalunya; and Ming-Jun Li, Corning Incorporated. "Another was the Plenary Session with inspiring talks by three leading executives, including two females, who shared insights into how technology is transforming our industry and reshaping the world." 

"The optical sector is currently in an exciting period," said Woo Jin Ho, Analyst - Hardware and Communications Equipment, Bloomberg Intelligence. "Companies continued to introduce and launch new innovations at OFC 2023, such as 1.2T and 1.6T coherent optics and Co-Packaged Optics. But it was really refreshing to hear the ramp up and monetization of the innovations that were introduced at OFC two, three years ago."

"What an amazing week with so many innovations in one place," said Jelena Pesic, Ph.D., Nokia. "Nothing can replace face-to-face meetings with colleagues and researchers around the world. For Nokia, it was an opportunity to show our cutting-edge innovation with new PSE-6s, Coherent Routing, network automation, integrated C+L band line systems and 25G PON. Looking forward to seeing the boundaries being pushed even further at OFC 2024!"

OFC 2024 is scheduled for 24-28 March at the San Diego Convention Center.

OFC video: First 200G PAM4 Mach-Zehnder modulated laser

What's hot at #OFC23? 

Sanjai Parthasarathi discusses the live demonstration of a 200G four-level pulse amplitude modulation (PAM4) Mach-Zehnder modulated laser. 

The demo featured a distributed feedback laser (DFB) and Mach-Zehnder modulator combined monolithically in a photonic integrated circuit (PIC) that enables 200G PAM4 for 1.6T transceivers with up to 10 km reach.

OFC video: Nokia’s Super Coherent Photonics Service Engine

What’s hot at #OFC23?

Nokia’s Serge Melle discusses the latest generation super-coherent Photonic Service Engine, capable of 1.2 Tb/s over metro distances (118km) and 800 Gb/s over long haul distances (2,019 km), using a single wavelength.

OFC video: 400ZR for Cloud Metro

What’s hot at #OFC23? 

Juniper is bringing to market new 400ZR and 400ZR+ optics to power its Cloud Metro architecture. 

Juniper's Irene Zheng provides an overview.