Data Center Networking Market Analysis Report By Product, By End Use And Segment Forecasts From 2019 To 2025

Industry Insights

The global data center networking market size was accounted for USD 19,853.1 million in 2018 and expected to grow with a CAGR of 11.0% during the forecast period, from 2019 to 2025. Strong data center networking solution demand is increasing due to a large amount of information that has been generated across various industries. Thus, demand for fetching real-time interaction with users and, optimization of on-demand services among various organizations are the major factors to drive the market growth. Further, the rising penetration of cloud computing across a wide range of industries will require the adoption of more data center networking. This is a key factor driving the market over the forecast period. Moreover, the growing adoption of advanced data center operating models coupled with the rising trend of data center virtualization is further expected to provide traction to the market growth.

Major organizations allocate their workload across various cloud platforms.  This has created the need for disaggregation and decentralization of data center infrastructure. According to organizations' requirements, data center networking models can be customized to make simpler cloud computing operations. These above-mentioned factors are anticipated to open new avenues for market growth.

Organizations have to face new challenges as they strive to digitalize and expand their services. A major challenge is to have a secure infrastructure for storing large amounts of data on a daily basis. Hence, the organization needs huge storage facilities and capacities to manage this information. A data center includes storage applications and networked computers that help in organizing, storing, disseminating, and processing information. The rising need for efficient infrastructure to process and store information is driving market growth.

Datacenter automation simplifies networking operations efficiently by offering debugging solutions, resolving complete networking solutions, and analyses the data traffic. Virtualization platforms and cloud computing are the key factors to drive the upgraded data center networking solutions. Cloud computing and data center networking businesses are increasing rapidly and are highly adopted across various industries. However, the complex structure of data center design is expected to hinder market growth.

Data centers networking solution enhances the performance of data centers and helps to optimize the existing resources. Communication service providers have started to offer intelligent networking solutions along with advanced features. This solution is able to simplify troubleshooting mechanisms, reduce network downtime, and streamline network maintenance, thereby driving the growth of the data center networking market.

Products Insights

Based on products, ethernet switches, application delivery controllers (ADC), routers, storage area network (SAN), WAN optimization equipment, network security equipment, and others. Several organizations are adopting SAN solutions to manage their data infrastructure effectively without incurring any extra cost on its expansion. In 2018, the SAN segment held the largest market share more than 20.0% of the global market. Several benefits such as enhancing capacity, offering scalability, flexibility, and provisioning centralized control.

On the other hand, the WAN optimization equipment is estimated to grow with a significant growth rate during the forecast period. These products have the capability to handle real-time applications that reduce the dependence on the expansion of infrastructure. WAN has several benefits such as secure the network, bandwidth optimization, and increase throughput to scale up quickly are expected to drive the segment growth in the next few years.

End-Use Insights

On the basis of end-use, the market is bifurcated into BFSI, retail, healthcare, government, IT and telecom, media and entertainment, education, manufacturing, and others. In 2018, the IT and telecom sector accounted for over 25.0% market share.  This growth is attributed to increasing demand for 4G services as well as continuous provisioning of 5G services. Increasing smartphone penetration along with a rising number of telecom subscribers would generate more information, which is expected to create the necessity for the adoption of data center solutions, thus providing traction to the market growth during the forecast period.

Datacenter networking is gaining traction in the BFSI sector and is projected to grow with the highest CAGR from 2019 to 2025. Rising demand for strong data center infrastructure to secure critical information of the user and safeguard transactions has led to the growth in demand for data center networking.

The banking sector is focusing on enhancing the customer experience and upgrading banking infrastructure continuously. Moreover, the rise in the application of mobile payment systems and online trading platforms is gaining popularity. Datacenter networking plays an important role in the smooth functioning of these platforms and systems. Thus proving strong growth to the market.

Regional Insights

In 2018, North America has dominated the global market and held the largest market share of over 30.0% in terms of revenue. At present, the region has around 1,600 data centers. North America is expected to lead the data center networking market from 2019 to 2025.

The Asia Pacific is projected to register the highest growth rate from 2019 to 2025. Increasing demand for data center operating models that secure information across various industries is expected to drive the market in the region. In addition, the rising demand for emerging data networking solutions in emerging economies including India and China along with other Southeast Asian countries has witnessed rapid adoption of cloud-based, on-demand, and high-speed internet. These above-mentioned factors are expected to drive market growth in the Asia Pacific region.

Impact of COVID-19

The outbreak of COVID-19 has witnessed a positive impact on the global data center networking market. In order to maintain the continued operations of companies, the demand for data center networking has increased in lockdowns globally. To run business operations smoothly, several businesses have adopted cloud services, thereby the demand for data centers has increased. Further, data accessibility and work from home during lockdowns have increased the need for data centers and this trend is expected to boost the market growth.

During the coronavirus pandemic, digital and online transitions have increased extensively resulted in the growing demand for collaborative tools such as Zoom or enterprise tools. Further, over-the-top platforms for entertainment like Hotstar and Netflix require scalable and robust data infrastructure due to surging data traffic. These factors are expected to drive market growth in this pandemic situation.

Data Center Networking Market Share Insights

The major players include in this market are Cisco Systems Inc.; IBM Corporation; Alcatel-Lucent S.A; HP Development Company, L.P. Other players include in this market are Dell Inc.; Hitachi Data Systems Corporation; Equinix Inc.; Vmware, Inc.; and others. The market is highly competitive in nature due to the emergence of new data centers across the world.

Market players are focusing on gaining a maximum customer base and higher market share. Ker market players are also concentrating on the expansion of the existing product portfolio by introducing technologically advanced solutions and implemented several strategies like merger & acquisition to strengthen the solution offering. For example, in 2018, IBM Corporation introduced 18 new data centers in order to support its networking capabilities in Europe, Asia Pacific, and the U.S. Other market players such as Amazon Web Services, Inc. and Google are also concentrating on expanding their geographical presence by implementing cloud Availability Zones (AZs) and establishing new data centers.

Report Scope

Segments Covered in the Report

This report forecasts revenue growth at global, regional, and country levels, and provides an analysis of the latest industry trends in each of the sub-segments from 2015 to 2025. For the purpose of this study, Million Insights has segmented the global Data Center Networking market report based on product, end-use, and region:

• Product Outlook (Revenue, USD Million, 2015 - 2025)
    • Ethernet Switches
    • Routers
    • Storage Area Network (SAN)
    • Application Delivery Controllers (ADC)
    • Network Security Equipment
    • WAN Optimization Equipment
    • Others

• End-Use Outlook (Revenue, USD Million, 2015 - 2025)
    • BFSI
    • IT & Telecom
    • Healthcare
    • Retail
    • Education
    • Government
    • Media & Entertainment
    • Manufacturing
    • Others

• Regional Outlook (Revenue, USD Million, 2015 - 2025)
    • North America
        • U.S.
        • Canada
    • Europe
        • U.K.
        • Germany
        • France
    • the Asia Pacific
        • China
        • Japan
        • India
    • Latin America
        • Brazil
        • Mexico
    • Middle East & Africa