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“The market performance continues to hit high notes, propelled by the release of a substantial backlog. Most of this backlog is from orders placed after the list price increases implemented by most vendors more than a year ago, said Sameh Boujelbene, Vice President at Dell’Oro Group. “Additionally, a larger portion of the second quarter’s shipments was destined to enterprises, resulting in a favorable product mix with higher prices compared to shipments to Cloud SPs. Meanwhile, the music in the Cloud SP arena has begun to fade, as many of them have started to enter a digestion phase following several quarters of robust spending. Furthermore, a sense of urgency pervades as they rush to build cutting-edge Artificial Intelligence (AI) infrastructure to accommodate emerging large AI workloads. These investments in AI infrastructure appear to be diverting budget away from traditional front-end networks that typically support general-purpose workloads,” added Boujelbene.
Additional highlights from the 2Q 2023 Ethernet Switch – Data Center Report:
Arista, Cisco, and HPE captured most of the revenue growth and were able to gain revenue share during the quarter.
Geographically, sales growth was broad-based across all regions, except China.
Further fueled by AI applications, shipments of 200 Gbps and 400 Gbps switches constituted approximately 25 percent of the revenue and 20 percent of the total shipments. Although Google, Amazon, Microsoft, and Meta continue to drive the majority of deployments, we observed an increasing number of shipments directed toward Tier 2/3 Cloud Service Providers and Large Enterprises.