Data center networking comprises networking equipment such as routers, switches, and cabling required to interconnect servers and storage within a data center as well as linking servers to the global network. Data center networking provides high-speed and reliable communication channels between server racks, reduces latency, congestion and downtime.
The global data center networking market is estimated to be valued at US$ 23.5 Bn 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.
Market key trends:
Increased adoption of cloud and other advanced technologies have been driving the growth of data center networking market size. Cloud computing has transformed various industries by enabling storage, management, and processing of data over remote servers. Rise in use of cloud for data storage, sharing and accessing has increased the data traffic in data centers exponentially. This has spurred the demand for high bandwidth and low latency networking solutions from data center network equipment providers to smoothly handle and route the data between servers, storage and to users. Switching and routing equipment with capabilities to handle huge data volumes are being increasingly adopted by cloud service providers and other data intensive organizations.
Strength: Data center networking offers significant cost savings with centralized operations and resources. The market sees growing demand for data storage and transfer with rising digitalization.
Weakness: High initial investment requirements and ongoing maintenance costs pose challenges. Network upgrades require downtime which impacts business operations.
Opportunity: Edge computing and 5G technologies will drive the need for high-speed networking infrastructure. Adoption of hybrid cloud models presents an opportunity to upgrade legacy systems.
Threats: Cyber threats like malware and ransomware pose security risks. Free open-source networking solutions threaten commercial offerings. Strict data sovereignty laws pose compliance challenges.
The global data center networking market is expected to witness high growth over the forecast period driven by increasing digital transformation across industries. The market size is projected to reach US$ 23.5 Bn in 2023 and expand at a CAGR of 11% during 2023-2030.
North America currently dominates the market attributed to heavy investments in digital infrastructure by cloud service providers like Microsoft, Amazon Web Services and Google. The Asia Pacific region is expected to be the fastest growing market with countries like China, India and Japan emerging as data hubs.
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 sees increased participation from Chinese players like Huawei which threatens Western vendors.