Global Data Center Network Equipment Revenue Hits $2.3 Billion in 1Q13

Data Center network equipment market begins to slow.

By Sean Michael Kerner | Posted Jul 3, 2013
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While some segments of the economy are improving, the global market for data center network equipment is slowing.

The first quarter 2013 (1Q13) Data Center Network Equipment report from Infonetics Research pegs global revenue for data center Ethernet switches, application delivery controllers (ADCs), and WAN optimization appliances at $2.3 billion for the quarter.

"Following two strong years of investment, growth in the data center equipment market is starting to slow," Matthias Machowinski, directing analyst for enterprise networks and video at Infonetics Research, said in a statement. "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 movesADC market hardware consumption from enterprises to large-scale data center operators."

The Infonetics report specifically noted that the Application Delivery Controller (ADC) market is flattening out in the first quarter of 2013. Revenue is up by only 2 percent in the ADC market, according to Infonetics. The ADC market is one that Infonetics has previously identified as at-risk from a revenue perspective. In the third quarter of 2012, Infonetics reported an annual year-over-year revenue decline.

The ADC market is shifting somewhat, thanks in part to Cisco's exit from the space. Cisco has now partnered with Citrix for ADC capabilities, which gave Citrix a boost to become number two in the market. Overall, Infonetics has F5 holding down the top spot in the ADC market. F5's CEO stated during his company's earnings call that Cisco's ADC exit helped his business.

Outlook

In addition to sizing the market by revenue, Infonetics also conducted its Network Equipment Spending and Vendor Leadership: North American Enterprise Survey to gauge opinions and outlook

"Our latest enterprise survey uncovered a solid outlook for network equipment spending, driven by the ever-growing demands placed on network infrastructure," Machowinski said.

The top four networking-related initiatives identified by the Infonetics survey were security, cloud, virtualization, and cost-related activities. The survey found a disconnect between enterprise budgets and network usage as organizations try to contain costs.

"Vendors who can solve this challenge are best positioned to take share in this $27-billion-a-year market,” Machowinski added.

Sean Michael Kerner is a senior editor at Enterprise Networking Planet and InternetNews.com. Follow him on Twitter @TechJournalist.

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