Almost $100-billion will be spent on campus switches over the next five years, according to a recent report by Dell’Oro Group.
A “digestion period” is expected in 2024, followed by a quick recovery and long-term growth.
“Despite rising concerns about the challenging macroeconomic environment and a tough comparison with the prior year, we expect campus switch sales to continue to grow in 2023, reaching a record revenue level by year-end,” says Sameh Boujelbene, vice-president at Dell’Oro Group. ” Extraordinary levels of backlogs and rising prices underpin our optimism for 2023. As we head into 2024, however, we expect the market to go through a correction period.
“Our most recent interviews with some of the value-added resellers (VARs) and system integrators (SIs) revealed that some of their customers have already started to ask them to put product delivery on hold until they “digest” the equipment they have on hand.
“Nevertheless, despite some short-term fluctuations in market performance caused by the unbalance between supply and demand, we expect sales to resume their long-term growth in 2024. Our interviews revealed that the fundamental growth drivers remain in place and that digital transformation initiatives will propel growth in the campus switch market for many years to come,” Boujelbene adds.
The Ethernet Switch – Campus 5-Year January 2023 Forecast report also found that 2.5/5.0 adoption will accelerate but shipments are expected to comprise less than 15% of total campus switch ports by 2027.
Power-Over-Ethernet (PoE) ports are expected to comprise more than half of the total campus switch port shipments by 2027.
Despite some short-term headwinds, China is expected to gain four points of revenue share over our forecast period.
Meanwhile, the IT/OT convergence is expected to increase over our forecast horizon but adoption may take time given the very long 10-year to 30-year lifecycle of industrial networking equipment.
The introduction of artificial intelligence capabilities will continue to play a key role in vendors’ competitive positioning in the market.