Cisco, VMware Battle for Enterprise, Data Center SDN Supremacy

Now considered mainstream, the enterprise and data center SDN market is expected to reach $15.8 billion by 2022 — that’s up from $4.4 billion in 2017, according to the most recent Data Center & Enterprise SDN Hardware and Software Market Tracker from IHS Markit.

The current market is maturing and is poised for growth. Drivers include dynamic and unpredictable application traffic flows that are rapidly requiring additional bandwidth or going “quiet.” Therefore, the network must be able to recognize individual application traffic flows and automatically adjust priority to match the dynamic nature of application traffic in a resource-constrained world.

Additionally, new application requirements and new compute flexibility due to multitenant servers (VMs or software containers), migration off premises, cloud services, and adoption of micro-service application architectures are driving the need to automate the data-center network. And, network virtualization deployments are ramping up to enable automation in the data center.

Market leaders Cisco and VMware are vying for the No. 1 position.

IHS Markit’s Cliff Grossner

“Cisco and VMware continue to trade places [as the market leaders], showing the choppiness of the market, which is depending how projects are going,” Cliff Grossner, senior research director and adviser, cloud and data-center research practice at IHS,” told us. Today, projects are in the thousands, and not tens of thousands.

At the time the report was published, VMware was No. 1, with 21 percent of 2017 in-use SDN revenue, and Cisco No. 2 with 19 percent. Other vendor rankings based on SDN revenue: Arista (13 percent), White Box (10 percent), and Huawei (7 percent). The biannual market tracker covers the half-year that ended on Dec. 31, 2017.

Additional insights into the SDN market report that bare metal switch revenue came to $790 million in 2017, representing 26 percent of total in-use SDN-capable Ethernet switch revenue.

Data center SDN controller revenue totaled $1.2 billion in 2017, and is expected to hit $4 billion by 2022, when it will represent 17 percent of data center and enterprise LAN SDN revenue.

“Not all the $15.8 billion in revenue in 2022 is new. SDN-capable Ethernet switch revenue is existing revenue, and a portion of SDN controller revenue is displaced from the Ethernet switch market due to reduced port ASPs,” said Grossner. “Some network operators will elect to use bare metal Ethernet switches when deploying SDNs and rely on SDN controllers for advanced control-plane features.”

Looking at leaders in individual SDN categories provides a more complete view of the market, according to the report’s author. White Box is No. 1 in bare metal switch revenue, VMware leads the SDN controller market segment, Dell owns 44 percent of  branded bare metal switch revenue in the second half of 2017, and HPE has the largest share of total SDN-capable (in-use and not-in-use) branded Ethernet switch ports.

The market tracker notes that Innovations continue, with bare metal switch vendors announcing 400GE switches with new programmable silicon that incorporates an on-chip ARM processor to support artificial intelligence (AI) and machine learning (ML), and allows data-plane protocols to be modified without changing silicon. Additionally, Edgecore Networks contributed its 440GE switch design to the Open Compute Project (OCP).

SDN controllers for the data center also continue to add functionality, with increased support for interconnecting multiple on-premises data centers, and with support for interoperation between cloud service provider (CSP) data centers and enterprises as they build multiclouds. Other notable enhancements include features that support container networking and integration with container management software such as Kubernetes.