When it comes to data center optics and switches, 400G technology is king of the castle. But a series of industry experts told Silverlinings that while demand for more bandwidth – 800G and beyond – is on the horizon, hyperscale cloud players are looking to for more than just faster speeds in their next upgrade cycle. Energy efficiency is also a key priority, they said.
The data center market is comprised primarily of two segments: switches and optics. Dell’Oro Group VPs Sameh Boujelbene and Jimmy Yu explained that you can think of a switch as a box inside a data center that is responsible for networking and moving packets around. The optics, meanwhile, connect the switches to the network.
There are optics both within and outside the data center. Optics in the latter bucket (commonly referred to as Data Center Interconnect, or DCI) fall into two categories, including metro, which serves localized data center clusters, and long haul, which connects data centers further apart.
While that all may sound like hum-drum technical speak, there’s good reason for all the buzz around this market. The DCI segment alone was worth $2.5 billion in 2022, while the data center switch market totaled $17 billion. And cumulative spending on data center switches between 2022 and 2027 is forecast to top $100 billion, with cloud service providers tipped to account for 60% of switch sales by the end of the forecast period.
Put a different way, vendors in this space are chasing a lot of green.
Data center switch market
According to Boujelbene, 400-gig technology currently reigns supreme in the data center switch market. However, she noted all of the hyperscalers are at different stages of adoption.
Google was the first to take up 400G, starting its rollout in late 2018, early 2019. For them, Boujelbene said, the technology is now mature and Google is beginning to tackle 800G. They’re one of the only ones doing so, but Boujelbene said its 800G progress to date has been slow and it’s not clear whether it’s the 800G switches or optics that are the problem.
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