The global data center networking market size was valued at USD 19,853.1 million in 2018 and is expected to exhibit a CAGR of 11.0% from 2019 to 2025. Robust data center networking solutions would be required as the volume of information generated across various industry verticals shows no signs of abating. The growing adoption of cloud computing across various industry verticals is also expected to drive the demand for these solutions over the forecast period. The growing trend of data center virtualization coupled with the adoption of advanced data center operating models is among the other factors that are anticipated to drive the market growth over the forecast period.
Large organizations are particularly trying to distribute their workload across multiple cloud platforms. This has triggered the need for decentralization and disaggregation of data center infrastructure. Given that organizations would adopt different data center operating models according to their requirements, the need for customized networking platforms to simplify cloud computing operations is growing. This is expected to open new opportunities in the market.
Organizations often have to confront new challenges as they continue to expand and digitalize. One of the major challenges is to ensure an efficient infrastructure to store the information generated every day. An organization today needs large storage capacities and facilities to manage all this information. A data center comprises networked computers and storage applications that can help in storing, organizing, processing, and disseminating the information. The growing need for ensuring an efficient infrastructure to store and process the information is driving the adoption of related solutions.
Data center automation can potentially simplify networking operations by analyzing the traffic, offering debugging solutions, and resolving all networking concerns in real time. The way data centers are designed, deployed, networked, and maintained is evolving fundamentally. Cloud computing and virtualization platforms are also evolving accordingly, thereby driving the demand for next-generation data center networking solutions. As such, data center networking and cloud computing businesses are growing rapidly and are emerging as highly sought-after services for diverse applications in various industry verticals. However, the increasing complexity of data center designs is emerging as one of the significant factors restraining the growth of the market.
Data center networking solutions help in optimizing the available resources and enhancing the efficiency of data centers. As such, communication service providers have already started providing intelligent networking solutions with advanced capabilities. These networking solutions can potentially streamline network maintenance, reduce network downtime, and simplify troubleshooting mechanisms in the data center environment. These networking solutions also allow data center operators to leverage the latest technologies, such as machine learning, thereby driving the market growth over the forecast period.
Based on product, the market has been further segmented into ethernet switches, routers, storage area network (SAN), application delivery controllers (ADC), network security equipment, WAN optimization equipment, and others. Most of the organizations are utilizing storage area network (SAN) solutions to effectively manage their data center infrastructure without incurring any additional expenses on its expansion. The SAN segment witnessed significant growth and accounted for over 20% of the market share in 2018. The popularity of SAN solutions can be attributed to various benefits they can offer, such as provisioning centralized control, enhancing capacity, and offering flexibility and scalability.
However, the WAN optimization equipment segment is projected to register a significant CAGR over the forecast period. WAN optimization equipment possesses the technological capability to handle real-time applications that ultimately reduce the reliance on the expansion of infrastructure. WAN optimization equipment can particularly benefit in the form of network acceleration. Bandwidth optimization and increased throughput to scale up quickly and secure the network are some of the other benefits associated with the adoption of WAN optimization equipment.
The IT & telecom segment accounted for more than 25% of the market share in 2018. The growing demand for 4G services and the continued rollout of the infrastructure for provisioning of 5G services allowed the segment to dominate the market. 4G and 5G networks happen to be data-intensive networks. The growing smartphone penetration and the increasing number of telecom subscribers would further generate more information, thereby necessitating the demand for data centers and subsequently the demand for data center networking solutions over the forecast period.
The BFSI segment is expected to register the highest CAGR over the forecast period. The growth can be attributed to the growing need for robust data center infrastructure to efficiently handle and safeguard critical user information and secure the transactions. Banking organizations are particularly trying hard to enhance the banking experience for their customers and are upgrading their core banking infrastructure continuously. At the same time, the popularity of online trading platforms and mobile payment systems is also growing. Data center networking solutions would play a vital role in provisioning online trading platforms and mobile payment systems.
The North America regional market dominated the global data center networking market in 2018 and accounted for more than 30% of the global market share. North America is home to several colocation facilities and data center service providers. At present, there are more than 1,600 data centers in North America. As a result, North America would continue being the largest regional market over the forecast period.
However, Asia Pacific is anticipated to emerge as the fastest-growing regional market over the forecast period. The surging demand for data centers that can secure, and safeguard information is expected to be the key factor driving the installation of new data centers and subsequently the demand for innovative data center networking solutions in the region. Emerging economies, such as China and India, along with other Southeast Asian countries are witnessing rapid adoption of on-demand, cloud-based, and high-speed internet services. These trends bode well for a notable rise in the provisioning of data center networking services in the region.
The data center infrastructure across the globe is being managed by a few predominant market players. The competition in the market is intensifying as new data centers are being installed in different parts of the world. The key players in the market include Alcatel-Lucent S.A.; Cisco Systems Inc.; IBM Corporation; and HP Development Company, L.P. Other players active in the market include Dell Inc.; Equinix Inc.; Hitachi Data Systems Corporation; and Vmware, Inc.; among others.
Gaining a higher revenue share and building a strong customer base are turning out to be top priorities for the market players. As such, most of the market players are focused on expanding their existing portfolio by launching new solutions and engaging in mergers and acquisitions to strengthen their solution offerings. For instance, IBM Corporation launched around 18 new data centers in 2018 in order to strengthen its networking capabilities in the U.S., Asia Pacific, and Europe. Other companies, such as Google and Amazon Web Services, Inc., are also focusing on geographical expansion by establishing new data centers and implementing cloud Availability Zones (AZs) as a part of their core business strategy.
Market size value in 2020
USD 24,225.8 million
Revenue forecast in 2025
USD 40,905.7 million
CAGR of 11.1% from 2019 to 2025
Base year for estimation
2015 - 2017
2019 - 2025
Revenue in USD million and CAGR from 2019 to 2025
Revenue forecast, company ranking, competitive landscape, growth factors, and trends
Product, end use, and region.
North America; Europe; Asia Pacific; Latin America; MEA
U.S.; Canada; Mexico; U.K.; Germany; China; India; Japan; Brazil
Key companies profiled
Alcatel-Lucent S.A.; Cisco Systems Inc.; Dell Inc.; Equinix Inc.; Fujitsu Limited; HP Development Company; L.P.; Hitachi Data Systems Corporation; IBM Corporation; Intel Corporation; Juniper Networks Inc.; and Vmware; Inc.
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This report forecasts revenue growth at the country levels and provides an analysis of the latest industry trends from 2015 to 2025 in each of the sub-segments. For the purpose of this study, Grand View Research has segmented the global data center networking market report on the basis of product, end use, and region:
Product Outlook (Revenue, USD Million, 2015 - 2025)
Storage Area Network (SAN)
Application Delivery Controllers (ADC)
Network Security Equipment
WAN Optimization Equipment
End Use Outlook (Revenue, USD Million, 2015 - 2025)
IT & Telecom
Media & Entertainment
Region Outlook (Revenue, USD Million, 2015 - 2025)
Middle East & Africa
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