The latest data from Dell'Oro Group showed global sales of data center switches jumped more than 20%, or $4.7 billion, in Q1 2023. Among market competitors, Arista Networks stands out for taking market share away from its biggest competitor Cisco.
The analyst firm’s Ethernet Switch — Data Center report indicated some vendors had up to a 40% reduction in lead times, a welcome change following over two years of component scarcity, which had been bottlenecking production.
Sameh Boujelbene, VP of Ethernet Campus Switch and Ethernet Data Center Switch market research at Dell’Oro, noted the sudden shift in the supply chain environment and subsequent market growth was “primarily fueled by the ongoing release of the backlog as supply conditions continue to improve.”
While vendors did increase prices, Dell'Oro said increased product availability accounted for the majority of the growth. “We have been predicting a double-digit increase in sales for 1Q23 but the growth exceeded our expectations as vendors were able to fulfill a higher level of shipments than originally anticipated,” Bouljelbene said. “Within the data center, we are seeing a significant increase towards high-speed network connectivity such as 200 Gbps and 400 Gbps Ethernet switch deployments,” she added.
Arista benefited the most from the sudden movement in the supply chain. This quarter it gained over six points of revenue share. Most of that growth came from sales of data center switches.
Service provider router and switch market also booming
In a separate Service Provider Router & Switch report, Dell’Oro said that the service provider router and switch market saw “extraordinarily strong growth in the quarter” due to hyperscalers and the “unleashed component supply” as vendors were “finally able to fulfill orders and catch up on backlog.”
“Revenues blew through the roof, growing 15 percent year-over-year. Only three times in the past twelve years has the SP Router market increased at this rate,” noted Ivaylo Peev, senior analyst at Dell’Oro.