Prices for switches for data centers in 2018 decreased. Analysts expect the trend to continue in 2019. Under the cut, we understand what is the reason.
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Trends
According to a report by research organization IDC, the global data center switch market - In the fourth quarter of 2018, sales of Ethernet switches increased by 12,7% and amounted to $7,82 billion. Despite the growth in demand, the price of devices for 2018 decreased. 100GbE dropped the most in price: at the end of 2017, it $532 per port, and at the end of 2018 - already $288 per port. The price for 40GbE has also dropped from $478 to $400 per port.
The IDC data is also confirmed by the Crehan Research report. According to them , for 2014-2018, the cost of ethernet switches fell by an average of 5%. Price reduction and Gartner experts: in last year's report, they advised data centers to move from 10GbE and 40GbE technologies to 100 GbE due to lower equipment costs. Experts point to several reasons.
High competition
Switch manufacturers are forced to cut prices on their devices due to competition from -solutions. Increasingly, companies and data centers prefer "brandless" switches because of the wider customization options for such devices - they work with a large number of different operating systems and -solutions.
Also, whitebox systems are often cheaper than proprietary switches. An example would be the case of one of the gaming companies - whitebox devices organization is twenty times cheaper than a similar system from IT giants.
Today, whitebox devices are produced even by large IT companies. In March, your switch Facebook - It has 100GbE and 400GbE ports. Its specification will be transferred to the project and make it completely open.
Reading on the topic in our corporate blog:
Distribution of virtualization
On Statista, 2021% of data center workloads will be virtualized by 94. At the same time, the introduction of virtual network devices is one of three for data center operators in Europe and North America. This trend leads to a decrease in demand for physical switches and the spread of SDN solutions.
It is expected that in the next three years, the volume of traffic passing through the SDN systems of data centers will : from 3,1 zettabytes to 7,4 zettabytes. Analysts that this, again, will cause an increase in demand for whitebox routers.
Technology maturity
Cost reduction is also associated with the active development of Ethernet and the emergence of new standards. In 2018, network device manufacturers began the transition to 400GbE: commercial 400-gigabit products Cisco, Juniper and Arista.
The development of a new standard leads to a drop in prices for previous generations of Ethernet. The most significant decline in the last year was the reduction in the cost of 100GbE devices. It came as a surprise even to analysts. representatives of the Dell'Oro research group, experts predicted a price decrease to the level of the end of 2018 only for the last quarter of 2019.
Experts also attribute the fall in the cost of 100GbE to the development of technology. Manufacturers have been producing 100-gigabit devices since about 2011 - during this time, production has improved, and the cost of creating switches has decreased.
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What's Happening in Other Data Center Markets
Servers, unlike switches, are only getting more expensive. The increase is associated with an increase in the cost of processors: in 2018, the market faced a shortage of chips from Intel due to a sharp increase in demand for CPUs from data centers. In conditions of shortage of processors, their cost at some retailers one and a half times.
The chip shortage is expected to continue until at least the third quarter of 2019. At the same time, demand continues to grow: many data centers are replacing old chip models with new ones that are protected from Specter and Meltdown vulnerabilities. Probably, the prices for processors and servers in such a situation will increase further.
If we consider the field of data storage, then there is a decrease in the cost of solid-state drives (SSD). Gartner estimates SSD price from 2018 to 2021 2,5 times. If this happens, experts say that SSDs will begin to actively replace hard drives from data centers. HDDs take up too much space and are less reliable than SSDs. If for SSDs the failure rate 0,5%, then for hard drives this figure is 2-5%.
Conclusions
In general, we can say that the cost reduction is associated with the rapid development of the data center equipment market. In the future, prices may fall for other hardware for data centers.
Increasingly popular whitebox solutions in the server segment as well. If this trend continues, then prices for server hardware may begin to change downwards.
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Source: habr.com