Data center switch sales surge on improved supply conditions: Dell'Oro

June 12, 2023
According to Dell’Oro Group, higher prices and backlog release dynamics catapulted data center switch sales to a new record level in 1Q 2023, with top vendors Arista and Nvidia reportedly outperforming the market significantly.

According to a recently published report from Dell’Oro Group, global sales of data center switches witnessed impressive growth of more than 20 percent in 1Q 2023, representing the fourth consecutive quarter of record-breaking revenue levels.

Sameh Boujelbene, VP at Dell’Oro Group, explained: “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. 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."

The new report by the analyst for the telecommunications, security, networks, and data center industries stated the market's growth was broad-based across all major vendors, with Arista and Nvidia leading the pack and significantly outpacing market performance.

Dell'Oro's Boujelbene added: "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."

Cloud, AI and Tier 2/3 are drivers

Dell'Oro Group's 1Q 2023 Ethernet Switch – Data Center Report states that 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.

Meanwhile, that analyst reports that, further fueled by Artificial Intelligence (AI) applications, shipments of 200 Gbps and 400 Gbps switches constituted approximately 25 percent of the segment's revenue and 20 percent of the total shipments.

And although Google, Amazon, Microsoft, and Meta continue to drive the majority of deployments, Dell'Oro said that in the first quarter it observed an increasing number of data center Ethernet switch shipments directed toward Tier 2/3 cloud service providers and large enterprises.

The Dell’Oro Group Ethernet Switch – Data Center Quarterly Report offers a detailed view of the market, including Ethernet switches for server access, server aggregation, and data center core. (Software is addressed separately.)

The report contains in-depth market and vendor-level information on manufacturers’ revenue; ports shipped; average selling prices for both Modular and Fixed Managed and Unmanaged Ethernet Switches (1,10, 25, 40, 50, 100, 200, 400, ≥800 Gbps); revenue split by market segments as well as regional breakouts.

Learn more about the report.

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