White boxes in the cloud
The cloud segment of the Ethernet switch market has seen exponential expansion as new companies, business models, and services are underpinned and enabled by massive data center networking infrastructures. Crehan Research estimates that in 2012 the total cloud segment accounted for about 4 million data center Ethernet switch ports -- including OEM switch brands such as Arista, Cisco, Dell, IBM, and Juniper, as well as white-box switches.
Although a few very large cloud data center companies have deployed white-box data center switches, the majority currently uses OEM-branded data center switches. In large deployments, the price delta between white boxes and discounted, OEM-branded switches may not offer a compelling enough reason to shift to the white-box model. Conversely, in many smaller deployments, the scale may not be sufficient to make white-box economics work. Nonetheless, the level of interest in white boxes and the number of offerings continue to rise.
Crehan Research expects that the cloud market will see about a 25 percent shipment CAGR (compound annual growth rate) over the next five years, growing from less than 4 million ports in 2012 to 12 million-plus ports in 2017. This segment will likely see at least a gradual increase in white-box deployments. Combining these two factors results in a 32 percent shipment CAGR and a forecast of close to 5 million data center Ethernet white-box switch ports deployed in the cloud market segment by 2017 (see Figure 2).
White boxes in the enterprise
The enterprise data center switch market is rife with change and innovation. Over the past decade or so, enterprise data centers have moved from distributed to consolidated, physical to virtual, siloed to converged. At the same time, these data centers have had to handle a step-function shift in the demand curve for network traffic and storage, in conjunction with a flood of new client devices in the form of smartphones and tablets. And all of this while working with legacy infrastructures, since few of us have the luxury of starting over with a clean slate.
Along with these changes, we're seeing the transition from general-purpose switches deployed in data centers to switches specially built for the data center. This is shown by Cisco's transition from Catalyst (a general-purpose switch that can be used for the data center) to Nexus (a switch specifically built for the data center) and the rise of data center switch specialist Arista Networks.
As Figure 2 shows, even with a much slower growth rate than the cloud, we still expect the enterprise to remain a majority of the data center Ethernet switch market through 2017. Within this market we expect to see much slower adoption of white-box switches because of factors such as more diverse environments, longer and closer ties to existing switch vendors, end-to-end or full solution purchases, and vendor-provided value-added services such as technical support. Furthermore, with an average data center switch lifecycle in the enterprise in excess of four years, we need to keep in mind that a migration to new deployment models will be gradual for this segment as a whole.
How it all adds up
Combining both the enterprise and cloud white-box adoption curves results in Crehan's prediction of 3 million ports in 2014 or 7 percent of overall shipments. By 2017, we forecast that this will have increased to over 8 million ports or 15 percent of total data center switch port shipments.
While we believe adoption of white-box switches will be gradual, they will form an important part of the data center landscape over the coming years. SDN will flourish with open systems, and white-box switches will be an important part of that growth.
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