Data Center Networking Market Size, Share & Trends Analysis Report By Component, By End Use (BFSI, IT & Telecom, Healthcare, Retail, Education, Government, Manufacturing), By Region, And Segment Forecasts, 2024 - 2030

Report Overview

The global data center networking market was valued at USD 34.22 billion in 2023 and is projected to grow at a compound annual growth rate (CAGR) of 15.2% from 2024 to 2030. The increased adoption of advanced data center operating models and virtualization drives market growth. A few other factors driving growth for this industry include increasing real-time engagement with users and enhancing ‘on-demand’ services in different industries. Furthermore, the increasing use of cloud computing services across various sectors necessitates the expansion of data center networks.

The growth of data center networks is primarily influenced by increasing requirements for advanced technology solutions by businesses, consumers, and governments and unceasing growth in demand for high-speed internet. Data centers are the key component of digital infrastructure. Often, the data centers are located at particular points known as Internet exchange points (IxPs). This is where other organizations, content delivery networks, and major internet service providers connect.

With the increasing adoption of technologies such as connected devices, smartphone-driven applications, and others, users anticipate quicker data retrieval, streaming options, and real-time applications, necessitating strong and effective data center networks to manage heightened traffic. Increasing dependence of businesses, services, supply chains, operations, and government authorities on high-speed internet is also expected to drive demand for the data center services market.

In recent years, numerous organizations have started expanding and transforming the business operations and multiple key functions into digital infrastructure. This has resulted in rising demand for data storage and data protection solutions. Growing dependability on data collection, data analytics, data-driven strategic decisions, and data management has led to a rise in demand for data center network services.

Component Insights

Based on components, the hardware segment dominated the global market for data center networking and accounted for a revenue share of 53.3% in 2023. Some of the significant hardware associated with the data center networking market include an Ethernet switch, router, Storage Area Network (SAN), network security equipment, Application Delivery Controller (ADC), and others. The hardware component of data centers plays a vital role in offering large storage capacity, better scalability, and productivity compared to software. The hardware also contributes to managing network devices, physical servers, and storage devices through monitoring, tracking, troubleshooting, and diagnosing.

The services segment is expected to experience the fastest CAGR during the forecast period. Aspects such as the growing adoption of cloud computing technology, increasing demand and adoption of modern technologies such as artificial intelligence and machine learning, and rising market penetration of Internet of Things technology primarily drive growth of this segment. The operational costs associated with data storage and data protection usually involve costs linked with power consumption, cooling systems, regular maintenance, and more. Businesses prefer to avail themselves of data center networking services instead of developing their storage and continuously spending more of their business funds on protection and management. This is expected to increase demand for the service segment in the approaching years.

End Use Insights

The IT & telecom segment dominated the market in 2023. The exponential growth of data and the need for high-speed, reliable connectivity are driving the industry's growth. As businesses increasingly rely on cloud services and virtualization technologies, advanced networking solutions that can efficiently manage and optimize data flow across extensive networks are critical. Additionally, the ongoing transition to 5G and the Internet of Things (IoT) further drives the necessity for robust data center networking to support low-latency applications and large data volumes.

The manufacturing segment is anticipated to experience the fastest CAGR of 17.7% from 2024 to 2030. Data centers support immediate data evaluation, which is essential for predictive maintenance. Internet of Things (IoT) sensors gather extensive data from manufacturing machinery, enabling early identification of potential malfunctions. The manufacturing industry is anticipated to continuously utilize Artificial intelligence (AI), Machine Learning (ML), and IoT to streamline operations, enhance product standards, and spur creativity. These technologies necessitate significant computational resources and fast network connections with low latency. Manufacturing industries handle confidential and exclusive data, positively affecting the adoption of data centers that provide high-level security measures to prevent unauthorized access and breaches, safeguarding data security, and contributing to market growth.

Regional Insights & Trends

North America data center networking market dominated the global industry and accounted for revenue share of 39.2% in 2023. The growth of this market is primarily driven by factors such as increasing adoption of cloud computing technology, rising AI applications in multiple industries, demand for high-performance networking infrastructure, increasing edge computing trends, and rapid growth in the expansion of 5G technology-driven networks. Nearly 300 million individuals in the U.S. live in 5G low-band service accessibility areas from all the suppliers operating in tier-1 services. The total number of 5G subscriptions worldwide is expected to reach approximately 5.6 billion in next few years.

U.S. Data Center Networking Market Trends

The U.S. data center networking market dominated the regional market. It accounted for the largest revenue share in 2023 due to the rising internet users in the U.S. contributing to the generation of large amounts of data. According to the National Telecommunication and Information Administration, in 2023, 83% of individuals aged three and above in the United States utilized the Internet in various ways, a rise from 80 percent in 2021. [HD2]  The rapid adoption of technological advancements and continuous development of the I.T. and telecommunication industry is fueling the market growth in the country.

Europe Data Center Networking Market Trends

Europe was identified as a lucrative global data center networking region in 2023. Countries such as the UK, Germany, and France are expected to experience noteworthy growth during the forecast period. Some of the key factors driving this growth include an increasing number of Internet users, growing demand for sophisticated data storage, data protection, and data center networking services, the entry of multiple businesses from other regions in Europe, dependability on the Internet, and unceasing growth penetration of technologies such as smartphones, artificial intelligence, connected devices, and others.

UK data center networking market is expected to experience significant growth during next few years. The market is driven by high demand for data center networking in the UK due to the increasing reliance on cloud services, digital services, and data-intensive applications. The growing importance of data security has led data centers in the area to adhere to rigorous regulations and enforce robust security measures for safeguarding sensitive data. Moreover, government support for establishing digital infrastructure and data centers, such as policies promoting digital innovation, is anticipated to stimulate market growth during the forecast period.

Asia Pacific Data Center Networking Market Trends

Asia Pacific data center networking market is anticipated to witness the fastest CAGR from 2024 to 2030. Factors such as rapid digital transformation of multiple businesses in the country, implementation of government policies for data localizations, and rising penetration of mobile networks in the region are driving growth of this market in the region. Focus of multiple e-commerce businesses on the region and accessibility and availability of online services associated with numerous industries has resulted in heavy online traffic and data generation for various businesses. This has developed increasing need for the high-performance networks and data center networking services in the region. In addition, growing dependability on internet, increasing use of smartphones, rising demand for the effective data storage and data protection solution by businesses in the region is expected to generate greater demand for this industry during forecast period.

China held a substantial revenue share of Asia Pacific data center networking market in 2023. The adoption of technologies such as Software-defined networks, Network Function Virtualization (NFV), High-Performance Computing (HPC) applications, Artificial Intelligence (A.I.), and Machine Learning (ML) is driving the need for high-speed interconnections. This has resulted in the growing demand for the effective data center networking services in China.

Key Company & Market Share

Some of the key companies in the data center networking market include ALE International, Cisco Systems, Inc., Equinix, Inc., Fujitsu, Hewlett Packard Enterprise Development LP, and others. Market players prioritize increasing revenue share and establishing a strong customer base. Therefore, the majority of market participants concentrate on growing their current product range through the introduction of new solutions and participating in mergers and acquisitions to enhance their offerings.

• ALE International, a global provider of communications infrastructure solutions and services, offers a comprehensive portfolio of products and solutions to cater to the diverse needs of enterprises across various industries. The company’s offerings in the data center networking portfolio include campus switches such as OmniSwitch 6900, data center switches, wireless Local Area Network (LAN) solutions, network management software such as OmniSwitch Genetec Plugin, etc.

• Cisco Systems, Inc., a global technology company, provides networking hardware, software, telecommunications equipment, and other high-technology services and products. The company offers networking hardware (routers, switches), software (Cisco IOS, NX-OS), security solutions, collaboration tools, data center solutions (Cisco Nexus Dashboard and others), and cloud services.

Recent Developments

• In June 2024, Cisco launched Cisco Nexus HyperFabric, a revolutionary AI cluster solution for the data center, in partnership with NVIDIA. The company aims to offer customers simplified data center infrastructure solutions so that they can concentrate on AI-driven innovation and new revenue possibilities instead of IT management.

• In March 2024, NVIDIA Corporation, one of the prominent companies in computing innovation industry, launched he X800 series, the newly developed networking switches. The product is designed and developed for AI technology operating at a massive-scale.

Data Center Networking Market Report Scope

Global Data Center Networking Market Report Segmentation

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 2018 to 2030. For this study, Grand View Research has segmented the data center networking market report based on component, end use, and region.

• Component Outlook (Revenue, USD Billion, 2018 - 2030)

  • Hardware

    • Ethernet Switch

    • Router

    • Storage Area Network (SAN)

    • Network Security Equipment

    • Application Delivery Controller (ADC)

    • Others

  • Software

    • Switching Operating System (OS)

    • Virtual Switch

    • Management Software

    • Controller

  • Services

    • Installation & Integration

    • Training & Consulting

    • Support & Maintenance

• End Use Outlook (Revenue, USD Billion, 2018 - 2030)

  • BFSI

  • IT & Telecom

  • Healthcare

  • Retail

  • Education

  • Government

  • Media & Entertainment

  • Manufacturing

  • Others

• Regional Outlook (Revenue, USD Billion, 2018 - 2030)

  • North America

    • U.S.

    • Canada

    • Mexico

  • Europe

    • Germany

    • UK

    • France

  • Asia Pacific

    • China

    • Japan

    • India

    • South Korea

    • Australia

  • Latin America

    • Brazil

  • Middle East and Africa (MEA)

    • Saudi Arabia

    • UAE

    • South Africa