Dell'Oro: Data center switch sales at record level

Global sales of Data Center Switches witnessed an impressive growth of more than 20 percent in 1Q 2023, representing the fourth consecutive quarter of record-breaking revenue levels, according to a new report from Dell'Oro Group. The growth was broad-based across all major vendors, with Arista and Nvidia leading the pack and significantly outpacing market performance.

"The substantial growth was primarily fueled by the ongoing release of the backlog as supply conditions continue to improve. In fact, some vendors reported 40 percent reduction in lead times on certain products compared to the prior quarter," said Sameh Boujelbene, Vice President at Dell'Oro Group. "Additionally, the market started to see some positive impact of list price increases implemented by most vendors about a year ago, as newer backlogs started to gradually get released.

"Revenue growth was broad-based across all major vendors, with Arista leading the pack by growing three times faster than the overall market and gaining over six points of revenue share in the quarter. Another standout performer was Nvidia, surpassing market growth and gaining more than one point of revenue share during the quarter," added Boujelbene.

Additional highlights from the 1Q 2023 Ethernet Switch – Data Center Report:

• Cloud Service Providers accounted for nearly two-thirds of the revenue growth in the quarter, while the Large Enterprise segment contributed to the remaining share.
• Further fueled by Artificial Intelligence (AI) applications, shipments of 200 Gbps and 400 Gbps switches constituted approximately 25 percent of the revenue and 20 percent of the total shipments. Although Google, Amazon, Microsoft, and Meta continue to drive the majority of deployments, we observed an increasing number of shipments directed toward Tier 2/3 Cloud Service Providers and large enterprises.

https://www.delloro.com/news/higher-prices-and-backlog-release-catapulted-data-center-switch-sales-to-a-new-record-level-in-1q-2023/

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Broadcom's networking revenue up 20%, VMware deal on track

Broadcom reported Q2 consolidated revenue of $8.7 billion, up 8% year-over-year, and adjusted EBITDA margin of 65%.

"Broadcom's second quarter results were driven by demand for next generation technologies from hyperscale, while enterprise and service providers continued to sustain," said Hock Tan, President and CEO of Broadcom Inc. "Our third quarter outlook projects year-over-year growth, reflecting continued leadership in networking as we support a measured ramp into large scale AI networks."

Some highlights

• Semiconductor solutions revenue increased 9% yoy to $6.8 billion
• Infrastructure software solutions grew 3% yoy to $1.9 billion
• Networking revenue was $2.6 billion, up 20% year-on-year, representing 39% of semiconductor revenue. There are 2 growth drivers here (1) continue growth in merchant deployments of Tomahawk and Jericho switching and routing (2) strong hyperscaler growth in AI infrastructure solutions from compute offload and networking, including 800G solutions.
• About 15% of the semiconductor business currently supports generative AI use cases and the company expects this to reach 25% next year.
• Broadband revenue grew 10% year on year to $1.2 billion. Growth drivers included 10G PON and DOCSIS solutions.
• Broadcom’s CEO Hock Tan also noted that the company’s pending acquisition of VMware is on track and the completion is expected this fiscal year.

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VMware's revenue rises 6% to $3.28 billion, SaaS at 37% of sales

VMware reported revenue for 1Q FY 24 of $3.28 billion, an increase of 6% from the first quarter of fiscal 2023. GAAP net income for the first quarter was $224 million, or $0.52 per diluted share, down 9% per diluted share compared to $242 million, or $0.57 per diluted share, for the first quarter of fiscal 2023. Non-GAAP net income for the first quarter was $644 million, or $1.49 per diluted share, up 16% per diluted share compared to $542 million, or $1.28 per diluted share, for the first quarter of fiscal 2023.

Highlights

• Subscription and SaaS revenue for the first quarter was $1.22 billion, an increase of 35% year-over-year.
• Subscription and SaaS revenue constituted 37% of total revenue for the quarter.
• Subscription and SaaS ARR for the first quarter was $4.85 billion, an increase of 32% year-over-year.

“We are pleased with our Q1 results. This past quarter we demonstrated momentum and engagement with our customers and partners as we continue to help them transform their businesses and unlock the full potential of multi-cloud,” said Raghu Raghuram, CEO, VMware. “

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Dell Technologies sees infrastructure sales drop 20% to $7.6 billion

Dell Technologies reported 1Q FY24 revenue of $20.9 billion, down 20%. The company generated operating income of $1.1 billion and non-GAAP operating income of $1.6 billion, down 31% and 25%, respectively. Diluted earnings per share was $0.79, and non-GAAP diluted earnings per share was $1.31, down 42% and 29%, respectively. Cash flow from operations was $1.8 billion.

"We executed well against a challenging economic backdrop," said Chuck Whitten, co-chief operating officer, Dell Technologies. "We maintained pricing discipline, reduced operating expenses, and our supply chain continued to perform well after normalizing ahead of competitors. We announced a record number of innovations, making good on our promise to extend Dell APEX as-a-Service capabilities across our full portfolio and simplifying multicloud and edge computing for our customers."

Highlights

• Infrastructure Solutions Group delivered first quarter revenue of $7.6 billion, down 18%. Storage revenue was $3.8 billion, with demand growth in the company's software-defined storage and leading midrange storage array. Servers and networking revenue was $3.8 billion, with demand growth in AI optimized high value workload servers. Operating income was $740 million, or approximately 10% of Infrastructure Solutions Group revenue.  
• Client Solutions Group delivered first quarter revenue of $12 billion, down 23%. Commercial revenue was $9.9 billion, and Consumer revenue was $2.1 billion. Operating income was $892 million, or approximately 7% of Client Solutions Group revenue.

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Ireland's electric utility plans private mobile network

ESB Networks, which operates the communications network for Ireland's state-ownd Electricity Supply Board (ESB), selected Sigma Wireless and its partner Nokia for the development of a private mobile network. Nokia will work with Sigma Wireless Communications and ESB to supply and install the new LTE-based private wireless system over a three-year period.

The network is seen as a key enabler for ESB Networks in delivering integration of renewable energy to the grid, decarbonization of the electrical network and electrification of heat and transport amongst other benefits. A dedicated Smart Grid telecoms network forms part of ESB Networks' Innovation Strategy that aims to bring many benefits to Ireland from an environmental, economic and customer perspective.

Nicholas Tarrant, ESB Networks Managing Director, welcomed the development: “An ever smarter and agile electricity network is key to the delivery of a more sustainable future, with the customer at its core. The purpose-built private telecommunications network now being developed will be a key enabler in delivering integration of renewable energy to the grid, decarbonization of the electricity network and the electrification of heat and transport amongst other benefits. As such, this private, reliable, and secure mobile network will be an indispensable precursor to delivering a Net Zero-ready electricity network.”

Tony Boyle Chairman Sigma Wireless said “Sigma Wireless has a long history spanning back over 30 years working with ESB. We are delighted to be awarded this contract, partnering with NOKIA, to be trusted to provide this state-of-the-art network which is a key enabler to help ESB to achieve its key strategic goals of decarbonization and renewable energy. “

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NTT Investment Partners Fund IV is established

NTT Group announced the establishment of the "NTT Investment Partners Fund Ⅳ) with the objective is to accelerate innovation and collaboration in services and technologies.

The fund size is 20 billion yen and the investors include NTT, NTT Finance and NTT DOCOMO Ventures.  The funding period shall be 12 years.  NTT DOCOMO is designated as fund manager.

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