Data center network equipment market dips 11% to $2.3 billion in first quarter of 2013

Infotech Lead India: Infonetics Research says revenue for data center network equipment including data center Ethernet switches, ADCs and WAN optimization appliances declined 11 percent sequentially to $2.3 billion in Q1 2013.

Purpose-built data center switches rose 30 percent year-over-year in Q1.

ADC revenue decreased 7 percent sequentially and up 2 percent from a year ago due to declining sales to the U.S. federal government and delays in tier 1 telco projects.

Thanks to its partnership with Cisco, which exited from the ADC market last year, Citrix is gaining momentum in the ADC space, growing market share by almost 10 points in the last year and gaining on #1 F5.

WAN optimization revenue is declining, due to feature integration and market saturation, Infonetics said.

Matthias Machowinski, directing analyst for enterprise networks and video at Infonetics Research, said: “While the near term outlook remains positive, ultimately we think the market is headed for a peak, as data center operators improve infrastructure utilization, and adoption of cloud services moves hardware consumption from enterprises to large-scale data center operators.”


SAN equipment growth

Meanwhile, revenue for SAN equipment, including Fibre Channel switches and iSCSI and Fibre Channel host bus adapters, declined to $604 million in Q1, an 8 percent drop from Q4 2012.

The initial pent-up demand that provided a jump start for 16G Fibre Channel switches is still in motion, but Infonetics believes it will soon slow and settle into a growth pattern more in line with the 8G segment.

Sales of chassis 16G Fibre Channel switches grew 45 percent, and fixed switches more than doubled from the previous quarter.

The high-performance interconnect equipment market, including converged FCoE/Ethernet switches and converged network adapters, slumped 13 percent sequentially in Q1, but are up 45 percent from the year-ago quarter.

Infonetics forecasts the SAN and high-performance interconnect (HPI) equipment market to top $9 billion by 2017, with the HPI segment gaining as 10GE, 40GE and 100GE transports become the norm for networking within the data center.

The leading manufacturers in the SAN and high-performance interconnect markets all had a down quarter in Q1.

“The bulk of 16G Fibre Channel deployments continue to be inter-switch link applications, but with server input/output capabilities rising with the introduction of Intel’s Romley, and with Emulex’s and QLogic’sfirst 16G Fibre Channel adapter shipments, we expect a more meaningful adoption of 16G for server connections to begin in 2013,” said Michael Howard, Infonetics Research’s co-founder and principal analyst for carrier networks.

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