Network Switches Market

[338 Pages Report] The Network Switches Market Size is projected to grow from USD 33.0 Billion in 2023 to reach USD 45.5 Billion by 2028; it is expected to grow at a Compound Annual Growth Rate (CAGR) of 6.6% from 2023 to 2028.

The need for simplified networking communication management and automation and growing investments in digital platforms coupled with the augmented global demand for data centers is expected to fuel the growth of the network switches market. However, high operational cost of network switches limiting the growth of the network switches industry.

Network Switches MarketForecast to 2028

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Network Switches Market Dynamics

Drivers: Augmented global demand for data centers

Data centers are playing a major role with rising technologies like IoT, AI and 5G. The global data center market is expected to register an impressive growth rate of 7.5%. The market garnered a valuation of USD 101.79 Billion in 2022 and is expected to accumulate a market value of USD 209.8 Billion by 2032. The increase in cloud migration has accelerated growth and expansion of data centers globally, causing major data center operators to expand their footprints. In 2021, U.S. users absorbed 500 megawatts (MW) of data space. Most of the absorption was driven by hyperscalers, the largest occupiers of data centers, which are mostly cloud services firms including Google Cloud, Amazon Web Services (AWS) and Microsoft. For instance, in 2019 Google Cloud plans to build new data centers in Nebraska, South Carolina, Virginia, Nevada and Texas. Similarly, Microsoft unveiled an aggressive plan to build 50 to 100 new data centers across the U.S. These investments will boost the demand for data center network switches. Additionally, there has been a rising number of smart devices like smartphones, IoT based devices, smart TVs, autonomous vehicles, and home appliances. This surge is expected to drive the integration of the chips in the data center servers, which will provide lucrative opportunities for the global network switch market growth.

Restraint: Technological complexity involved in network switches making it vulnerable towards security attacks

Routers, switches, and firewalls, collectively known as Network Infrastructure Devices, which are most important elements of any network. In terms of security, they should be the most hardened devices, however, due to their importance, administrators are seldom inclined to update them to ensure they do not inadvertently affect any network uptime. Network misconfigurations cost companies an average of 9% of annual revenues. It is found of that 96% of the organizations overlook routers and switches auditing resulting in vulnerabilities. One of the most common security weaknesses found in routers and switches is that some network engineers fail to change the default configurations of the devices. This can include administrator login credentials or security settings. This makes easy for hackers to gain access to enterprise servers, causing severe data breaches.

Opportunity: Rising data volumes across enterprises

IT infrastructure has seen tremendous shift with developments in technologies like edge computing, AI, IoT, 5G and Machine learning applications. The application of these technologies across different industry verticals like healthcare & life science, finance, smart agriculture, smart infrastructure, manufacturing retail, logistics, aviation, and defense systems. Additionally, 5G has given huge boost to many industries with its high-speed data transmission and internet coverage to every corner made customer span even wider. With growing customer base and applications, the data loads have increased significantly. These data volumes had to be transferred to servers and storage systems at higher bandwidth, which require advanced network switches for carrying out these operations.

Globally 2.5 quintillion bytes data is generated per day. By 2025 this data volumes are further expected to reach 463 exabytes globally. Some major giants like Google, Facebook, Microsoft, and Amazon store at least 1,200 petabytes of information. Adding to this by 2025, there would be 75 billion Internet-of-Things (IoT) devices in the world which adds to data loads across local servers and data center operations. All these trends will bring in more opportunities for network switches market across advancing countries.

Challenge: High operational cost of network switches

Network switches are extremely good for networking operations. They can move enormous amounts of data in milliseconds without ever having to slow down. This makes them perfect for applications which require high bandwidth and low latency – like gamers, video editors and cryptocurrency miners. The R&D cost of network switches is marginally high. The cost of switch goes high with added features like processors, memory, cabling, and connectors. The latest hardware being produced by bigger companies such as Intel and Broadcom usually cost a hundred dollars just for small 5-port models and can easily skyrocket up to thousands of dollars for a 24-48 port switch. However, the cost of the switch gets cheaper with technology becoming more efficient. Additionally, the added security features which is one of the most important aspects of network switch in the present generation, adds up to the overall cost of network switch. Network switches usually last for around four to five years, whereas an industrial switch lasts for 10 years, and hence gradual maintenance is required for uninterrupted functionality. An issue in any of the port of the network switch disrupts the performance of other ports and this creates more load on other ports making the operation difficult. Furthermore, the replacement cost is more since after every cycle these switches have to be replaced with new ones. This increases the cost of operation. Large-scale firms which extract larger data install switches with high durability, but the cost of procurement is quite high.

Network Switches Ecosystem

PoE Fixed Configuration Switches to exhibit highest growth during the forecast period.

The fixed configuration network switches include managed, unmanaged and PoE switches. The market for PoE Fixed Configuration Switches is expected to grow at the highest CAGR during the forecast period. The proliferation of power over automation and data center & enterprise networking are major factors influencing the power over ethernet market growth. With PoE network switch, there is no need for users to purchase and install additional electrical wires and outlets, which creates significant savings on installation and maintenance costs and time. Thus, these switches are cost-efficient. Thus , there would be a significant demand for the adoption of PoE switches in the near future.

Network Switchesfor cloud service providers data center end user segment is expected to grow at a significant CAGR from during forecast period

The cloud service providing industry is set to rise owing to the high efficiency and economies of scale offered by cloud computing. Cloud service providers offer services to several customers from a common shared infrastructure and help companies to save their IT infrastructure cost. Various cloud initiatives by different companies are bringing the network switch market forward. Also, these network switches over cloud assist the connectivity within data centers to support service delivery and back-office functions. To fulfill the bandwidth requirements over managed and unmanaged networks, cloud service providers are increasingly adopting switching solutions to scale up the existing infrastructure and to amend at a higher bandwidth solution. The advancements in networking technologies in this industry demand high scalability and management solutions, which are effectively being addressed by network switches. Thus, there would be an increase in the adoption of network switches by cloud service providers during the forecast period.

100 GBE switching port to hold a significant market share during forecast period

100 GBE switching port is expected to hold a larger market share during the forecast period. The network switch market's transition to 100GbE as the most popular network connection speed is an indication of the strong customer adoption of public cloud services. 100GbE has been the de facto switch port speed in some of the largest hyperscale cloud service provider data center networks since the last few years. As data centers started to move away from 40 GbE and the cost of 100 GbE networking equipment started to fall, 100 GbE networks started to be widely adopted. In the average enterprise, data center traffic is also ratcheting up, and 100 Gigabit Ethernet ports are expected to become commonplace in the next couple of years.

Managed switches to hold largest share of the fixed configuration network switches market during the forecast period

The fixed configuration network switches include managed, unmanaged and PoE switches. Managed switches are aimed at users that require a response time of milliseconds. Among fixed-configuration switches, managed switches are designed to deliver the most comprehensive set of features to provide the best application experience, the highest levels of security, the most precise control and management of the network, and the greatest scalability. Managed switches offer various benefits which is paving way for the increased adoption of these switches for different applications. Managed switches are especially suitable for organizations that need to manage and troubleshoot their network remotely and securely; allowing network managers to reach optimal network performance and reliability. Managed switches also offer powerful features like VLANs, LACP, as well as all advanced filter and multicast algorithms needed today to easily prioritize, partition and organize a reliable high-speed network.

Network Switches market in Asia Pacific estimated to grow at the fastest rate during the forecast period

The network swiches market in Asia Pacific is expected to grow at the highest CAGR during the forecast period. Increasing government initiatives and investments from technologically developing countries in Asia Pacific, such as India, Japan, and China, are driving the increasing deployments of data centers in the region, which in turn is expected to drive the market for network switches. Also, the increasing number of small- and medium-scale enterprises and the adoption of digital technologies in them further drive the demand for network switches. Moreover, the increasing penetration of the internet and the rising population of internet users in the region creates a massive amount of data that drives the demand for cloud-based services. All these parameters generate the need for deployment of network switches across the network infrastructure in data centers.

Network Switches Market Statistics by Region

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In the process of determining and verifying the market size for several segments and subsegments gathered through secondary research, extensive primary interviews have been conducted with key industry experts in the network switches market space. The break-up of primary participants for the report has been shown below:

• By Company Type: Tier 1 – 40%, Tier 2 – 40%, and Tier 3 – 20%
• By Designation: C-level Executives – 40%, Directors –40%, and Others – 20%
• By Region: North America –30%, Asia Pacific– 40%, Europe – 20%, and RoW – 10%

Key Market Players

Major vendors in the Network Switches Companies include Cisco Systems (US), Huawei Technologies (China), HPE Aruba (US), Juniper Networks (US), Arista Networks (US), NETGEAR (US), D-Link Corporation (US), Extreme Networks (US), NVIDIA Corporation (US), TRENDnet (US), Lantronix (US). Apart from this, Alcatel Lucent Enterprise (France), Dell Technologies (US), Pica8, Inc. (US), Larch Networks (US), STORDIS (Germany), IP Infusion (US), Buffalo Americas, Inc. (US), Linksys (US), TELEFLY Telecommunications Equipment Co., Ltd. (China), Allied Telesis (Japan), Moxa (Taiwan) are among a few emerging companies in the network switches market.

Network Switches Market Report Scope:

Network Switches Market Highlights

This research report categorizes the network switches market based on Type, End User, Switching Port and Region

Recent Developments

• In June 2022, Cisco Systems (US) introduced new Nexus 9000 400G performance options at scale with a migration path to 800G performance in the near future. It has a new compact, modular chassis that offers up to 64 ports of 400G line-rate performance (or up to 128 ports of 100/200G performance). The Nexus 9400 is an ideal solution for customers who want the flexibility of modular line cards in a 4 RU compact form factor leveraging a single 25.6 Tbps industry leading Cisco ASIC. Use cases include compact spine designs and efficient multi-plane scale-out fabric designs enabling gradual transition from 100G to 200G to 400G links.
• In June 2022, HPE Aruba (US) introduced 400GbE switches that designed for the most demanding environments. The Aruba CX 9300-32D is a next-generation 12.8Tbps, 1U fixed configuration switch with 32 ports of 400GbE that supports port breakouts for 200G, 100G, and 25G. The switch is designed to provide flexible, cost-effective, high-density 100/200/400GbE for servers, storage, and intra-fabric connectivity.
•  In January 2022, Cisco Systems (US) has announced its Cisco Catalyst 9000 portfolio, based on the powerful Unified Access Data Plane (UADP) ASIC silicon, to bring more enterprise-grade switching capabilities to the industrial edge for industries operating in harsh environments and supporting critical infrastructure like utilities, oil and gas, roadways, and rail.

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