Data center switch sales decline

According to a recently published report from Dell’Oro Group, spending on Ethernet data center switches declined in 1Q 2024, marking the first decline since 4Q 2020.

While Ethernet data center switches are gaining ground in AI back-end networks used to connect accelerated servers, this footprint expansion was not enough to offset the decline in spending in the broader front-end network, used to connect general-purpose servers.

“In line with our expectations, backlog normalization, inventory digestion, and spending optimization caused a decline in Ethernet data center switch sales in the first quarter of the year,” said Sameh Boujelbene, Vice President at Dell’Oro Group. “The decline was broad-based across Cloud Service Providers (SPs) as well as Enterprise segments, though certain accounts performed better than others depending on where they are in the digestion cycle. Despite overall spending softness in the front-end network, spending in AI back-end networks continues to grow exponentially. While Ethernet was able to capture an increasing share of AI infrastructure spending, this growth couldn’t offset the decline in the front-end network,” added Boujelbene.

Additional highlights from the 1Q 2024 Ethernet Switch – Data Center Report:

The decline was broad-based across almost all major branded vendors, with the exception of Arista and Huawei. White-Box vendors also saw a revenue increase, driven by spending recovery from several large Cloud SPs, including Google and Amazon in the U.S. and Alibaba, Tencent, and ByteDance in China.

Shipments of 200 Gbps, 400 Gbps, and 800 Gbps switches constituted nearly 25 percent of total port shipments in 1Q 2024 and were the only speeds that showed growth during the quarter. We expect 400 Gbps and 800 Gbps adoption to accelerate in 2024 and 2025, as some of the AI workloads will start favoring Ethernet. We discuss the potential future adoption of Ethernet in AI infrastructure in our “AI Network for AI Workload” report.

i4Networks harnesses Nokia solutions to enhance optical connectivity, reinforcing the Netherlands...
Digital Realty introduces the Innovation Lab, offering a state-of-the-art environment for...
Exploring disaggregated inference infrastructure and NVIDIA Rubin CPX's pivotal role in scaling AI...
Nokia partners with Supermicro to offer AI-enhanced, high-performance data center solutions,...
EXA Infrastructure unveils Project Visegrád, a transformative fibre network set to enhance Central...
Arvato launches operations in the UAE, enhancing its hyperscaler services with a new data centre...
Vertiv unveils new PowerIT rack PDUs to cater to data-intensive workloads like AI and HPC,...
Nokia partners with EBB to enhance AI data centers in Malaysia, aligning with national policy and...