Data center networking facilitates the seamless flow and exchange of data between various IT infrastructure components within a data center. Rising demands for virtualized IT infrastructure and increased data traffic from enterprises are driving greater needs for efficient data center networking solutions. Edge networking and Software-Defined Networking (SDN) technologies have enabled higher scalability, flexibility, and automation in data center networks.
The global data center is estimated to be valued at US$ 23.5 Billion in 2023 and is expected to exhibit a CAGR of 11% over the forecast period 2023 to 2030, as highlighted in a new report published by Coherent Market Insights.
Data center networking consists of switches, routers, and other networking equipment that enable communication and connectivity within a data center infrastructure. Growing adoption of cloud computing services and big data analytics across industries has spurred demand for higher data center capacity and network bandwidth. Sophisticated networking solutions allow data centers to efficiently scale up and adapt network architectures as computing needs and traffic volumes increase over time. Modern technologies such as 25/50/100 Gigabit Ethernet switches support heavier workloads and faster data transfer rates. The increased need for connecting numerous virtual machines and storage area networks has augmented the market for high-performance networking equipment.
Market key trends: One of the key trends in the data center networking market size is the rise of software-defined networking (SDN). SDN allows automation of network management, enhances network control and programmability, and delivers greater network flexibility. It separates the network control functions from hardware switches and enables administrators to instantly provision new services. SDN improves network virtualization capabilities and reduces costs associated with physical network redesigns. Another major trend is the emergence of edge data centers to support low-latency applications closer to end-users. The rapid data traffic at the edge necessitates robust networking infrastructure to mitigate bottlenecks. Edge networking adoption will continue growing over the forecast period as more enterprises prioritize delivering seamless digital experiences with shorter response times.
Threat of new entrants: Low network effects and high capital requirements create barriers for new entrants.
Bargaining power of buyers: Large cloud service providers have significant bargaining power over suppliers due to their purchasing scale.
Bargaining power of suppliers: Well-established networking infrastructure vendors hold strong market positions, exercising pricing power over buyers.
Threat of new substitutes: Incremental innovations in network optimization continue to introduce new opportunities.
Competitive rivalry: Intense competition exists amongst leading vendors differentiating through new features, services, and integrated solutions.
The global data center networking market is expected to witness high growth. With increasing digitization across industries, the demand for scalable data center infrastructure is on the rise. Significant investments by hyperscale operators are driving the need for high-bandwidth networking solutions.
Regional analysis: North America dominates the market currently due to strong demand from colocation service providers and public cloud operators. The Asia Pacific region is expected to grow at the fastest pace owing to the rise of local data centers in countries like China and India. Penetration of technologically advanced solutions is further augmenting the market in developed economies of Europe.
Key players: Key players operating in the data center networking market are Google, Inc., Huawei Technologies Co. Ltd., Cisco Systems, Inc., Brocade Networking Solutions, Hewlett Packard Enterprise, Extreme Networks, Inc., Arista Networks, Avaya, Inc., Juniper Networks, Dell Inc., and Microsoft Corporation. The market leaders are focusing on high-performance solutions and managing end-to-end infrastructure services. Strategic acquisitions and partnerships remain crucial for expanding portfolio and global footprints.