Enterprise Ethernet services market to reach $62bn by 2018, says Ovum

Ovum has predicted that the enterprise Ethernet market will exceed $62bn (£40bn) by 2018, growing 13.6% every year

Growth in communications service providers (CSPs), cloud providers and high-capacity datacentres are accelerating the growth of the global enterprise Ethernet services market.

Independent telecoms analyst Ovum has predicted that the enterprise Ethernet market will reach a value of $62bn (£40bn) by 2018, growing at a rate of 13.6% every year from 2012.

The research firm is also predicting higher growth potential for the EMEA region than North America. Its forecast found that the North American Ethernet services market will grow at a steady 11% every year to 2018, while EMEA will grow at nearly 15% because of carrier activities in Eastern Europe and the Middle East.

“Ethernet and IP VPN are the two essential data-optimised WAN connectivity technologies that are supplanting many legacy data connectivity technologies,” said Ian Redpath, principal analyst for network infrastructure at Ovum.

In the Asia-Pacific region, excluding Japan, the growth forecast is at 23.9% based on a growing Ethernet market in China and other South East Asian countries such as Indonesia, Malaysia, Philippines, Thailand and Vietnam. Japan, the largest Ethernet market in Asia-Pacific at $6.5bn in 2012, is projected to continue at a mature market growth rate of 5.3%.

The resilient nature of Ethernet service growth is underpinned by a number of factors, according to Ovum. “Enterprises continue to combine previously separated voice and data networks into one converged Ethernet network connection, are comfortable in doing so, and are happy to reap the connectivity savings,” said Redpath.

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Network upgrades

In addition, a large-scale optical network refresh is underway worldwide, he predicted, adding that Ethernet infrastructure deployments are likely in CSPs’ wholesale and high-capacity datacentre interconnect types of applications.

Redpath also predicted that the deployment will extend, in time, to major network global hubs and datacentre-dense markets.

“The latest wave of network upgrades is enabling the 100GbE-as-a-service market to begin. The new multi-terabit optical systems can accommodate 100GbE (Gigabit Ethernet) as a service and the communications service providers are starting to roll out 100GbE as a service,” he said. Ovum projected the 100GE market to start modestly.

Major network suppliers, such as Cisco, Juniper and Brocade, already sell 100GbE-capable switches and routers, mostly aimed at datacentre fabrics for users such as telecoms operators and cloud providers. 

But a majority of enterprises are still rolling out 10GbE links in their networks. But as the need for more speed and capacity intensifies, many are testing and deploying the first generation of 40GbE switches and routers to get ahead of this continuous onslaught of traffic in the age of IT consumerisation.

Datacentre networks are beginning to change to reflect these changing traffic patterns. Instead of an architecture designed to take traffic from servers to the edge of the network and vice versa – known as north-south traffic – they are becoming fabrics, with all nodes interconnected, enabling high-speed bandwidth for east-west connectivity as well, Clive Longbottom, founder of analyst firm Quocirca, told Computer Weekly previously.

These datacentre network fabrics are driving the need for huge amounts of additional bandwidth, according to Longbottom.

Port growth

Emerging Ethernet markets in many countries will also see a long run of port growth ahead as their fundamental telecoms infrastructure is improved, enabling more businesses to connect to local and global networks, the analyst estimated. 

Meanwhile, in the highly developed Ethernet markets, bandwidth-per-port growth will be the highlight as more bandwidth-intensive applications ride over the top of the Ethernet connection.

“The most fundamental state-of-competition factor is the number of players in a market. Competition continues to heat up in key global cities and regions,” said Redpath.

CSPs will need to continue to sharpen their differentiators – access, interconnection, cost base, service wrap and bundle propositions – to stay on top, he said.

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