2010 promises to be an interesting year in the enterprise LAN switching market.
With the exception of Avaya, next-generation data center initiatives are driving the LAN switching market and its consolidation. And they are all intended to compete more intensely with Cisco, which owns 70% of the Ethernet switching market but still has an insatiable appetite for growth.
"Big data center vendors are driving LAN switching decisions, and purchases," says Zeus Kerravala, an analyst with The Yankee Group. "Where innovation's been needed is in the data center."
"Innovation is being driven in the data center," says Steve Schuchart of Current Analysis. The drive to automate the data center is making the all-in-one buy from a single large vendor more attractive to customers, he says.
Indeed, the LAN switching market is no longer "Cisco and the Seven Dwarves" – the seven companies all vying for that 25% to 30% share Cisco doesn't own. The LAN switching market is now steered by Cisco, IBM, HP and Dell, and perhaps Brocade – data center networking, server and storage stalwarts looking to take their customers to the next-generation infrastructure of unified fabrics, virtualization, and the like.
Data center deployments of 10G Ethernet are helping to drive the market, according to Dell'Oro Group. The firm expects the global Ethernet switching market to grow modestly in 2010, to $16.3 billion from $15.6 billion in 2009. This is down considerably though from the $19.3 billion market in 2008, Dell'Oro notes.
And pricing pressure is expected to increase, according to a Nov. 19 Goldman Sachs survey of 100 IT executives on IT spending. With its 3Com buy, HP can now offer a core data center switch in addition to the enterprise switches it sells at roughly half the price of comparable Cisco products, the survey notes. And with Juniper ramping up its IBM and Dell OEM channels, Cisco's market share will be squeezed if profit margins are to be maintained, the survey suggests.
Another carrot for Juniper and its high-performance networking direction will be buying patterns. The Goldman Sachs survey found that most respondents base their purchase on price performance over architectural road map.
Where does all this jockeying among the top tier leave Extreme, Enterasys, Force10 and the rest of the pack? They've always claimed price/performance advances over Cisco but never gained any meaningful market share. And in terms of marriages, Enterasys united with Siemens Enterprise Communications to go squarely after the secure wired/wireless unified communications opportunity.
Force10 is merging with Turin Networks, a provider of wireless backhaul, Carrier Ethernet and converged access systems for service providers. Force10 seems to be gravitating more and more to the carrier cloud, but is still a high-performance data center play – though one that was left behind by the data center systems mainstays.
That leaves Extreme Networks virtually alone in LAN switching. The company has been extending its product line for data center-specific applications, such as virtualization and 10G Ethernet. But analysts say they will have little relevance beyond Extreme's installed base.
"What problem is Extreme solving that nobody else is?" Kerravala asks. "There just isn't a differentiator compelling enough."
Extreme begs to differ. "Extreme Networks delivers a network that requires fewer resources to operate and acquire while offering unique capabilities to scale for future requirements and changing demands," says Chief Marketing Officer Paul Hooper. "We achieve this through the delivery of a consistent Ethernet portfolio, stretching from the edge of the network to the core, all powered by a single OS, ExtremeXOS. Extreme's network platform also enables organizations to migrate their data centers from physical to virtual to cloud networks. The benefit is that enterprises can smoothly transition from separate to converged networks and carriers can adopt pure Ethernet-based services."