Data Center Networking Market: Global Size, Share, Trends, Growth and Forecast, 2022-2032

Data Center Networking Market Key Highlights

The Global Data Center Networking Market is expected to grow from USD 20.3 billion in 2022 to USD 62.3 billion by 2032, at a CAGR of 11.9% during the forecast period 2022-2032.

Data Center Networking Market Overview and Definition

The data center networking market refers to the collection of products and services designed to provide networking capabilities to data centers, which are centralized locations where computing and networking resources are concentrated for the purpose of managing and processing large amounts of data.

Data center networking products and services include a variety of hardware, software, and infrastructure components such as switches, routers, firewalls, load balancers, and network security solutions. These components are used to connect servers, storage devices, and other computing resources in the data center to create a high-speed, reliable, and scalable network that can efficiently handle large volumes of data traffic.

In addition to traditional on-premise data center networking solutions, cloud-based and hybrid cloud solutions have emerged as increasingly popular options for managing data center networks. These solutions offer greater flexibility, scalability, and cost savings, and enable organizations to easily scale their networking infrastructure as their needs evolve.

Overall, the data center networking market is an important segment of the broader networking industry, and is expected to continue growing as organizations increasingly rely on data centers to manage their IT infrastructure and support their business operations.

A data center network is an arrangement of network devices such as switches, routers, and interfaces that inter-connects the various storage and computing units in a resource pool of the data center to ensure a high-level of performance.  The data center networking is the process in which the all the network-based devices and equipment are connected within the data center facility. It makes a digital connection between data center equipment and infrastructure so that they can easily transfer data among them.

The data center networking within an enterprise connects servers to other servers and users. Connections are made through routers, switches, and various types of cables. It is capable of handling high bandwidth data delivery to and from storage endpoints, servers, and switches enables to move massive data efficiently.

Data Center Networking Market Growth Drivers

Increasing demand for cloud computing: As more organizations adopt cloud computing for their IT infrastructure needs, there is a growing need for high-speed, scalable, and reliable data center networks that can support cloud-based applications and services. This is driving demand for data center networking solutions that are optimized for cloud workloads.

Rising data center traffic: The explosion of data generated by digital transformation initiatives, the Internet of Things (IoT), and other data-intensive applications is putting significant strain on data center networks. To keep pace with this rising demand, data center operators need to invest in networking solutions that can support high-speed data transfer and reduce latency.

Adoption of virtualization technologies: Virtualization technologies such as server virtualization and software-defined networking (SDN) are becoming increasingly popular in data center environments. These technologies require networking solutions that can support virtualized workloads, enable network automation, and provide greater flexibility and agility.

Emphasis on network security: Data breaches and cyberattacks are a growing concern for organizations, and as a result, there is an increased focus on network security in data centers. This is driving demand for data center networking solutions that incorporate robust security features such as firewalls, intrusion prevention systems (IPS), and secure access controls.

Growing adoption of edge computing: Edge computing is becoming increasingly popular for applications that require low latency, such as IoT and real-time analytics. This is driving demand for data center networking solutions that can support edge computing workloads and enable fast and reliable data transfer between edge devices and centralized data centers.

Data Center Networking Market Challenges

Increasing complexity: The rise of virtualization, cloud computing, and other technologies is leading to greater complexity in data center networking environments. This can make it difficult for organizations to manage their networks and maintain high levels of performance and reliability.

Rising costs: Data center networking solutions can be expensive, and organizations must carefully balance the cost of their networking infrastructure with the performance and reliability benefits it provides.

Security concerns: As data breaches and cyberattacks become more common, organizations must invest in network security solutions to protect their data and systems. However, these solutions can add to the complexity and cost of data center networking environments.

Talent shortage: There is a shortage of skilled network engineers and administrators with the knowledge and expertise needed to manage complex data center networking environments. This can make it difficult for organizations to find and retain the talent they need to maintain their networks.

Compatibility issues: As new technologies and standards emerge, organizations may face compatibility issues between their existing networking infrastructure and new solutions. This can make it difficult to upgrade or expand their networks, or to adopt new technologies that could provide significant benefits.

Data Center Networking Market Segmentation

The data center networking market can be segmented based on several factors, including:

Component: This segmentation is based on the different components that make up a data center networking environment, such as switches, routers, firewalls, load balancers, and other network infrastructure components.

Deployment: This segmentation is based on the type of data center networking deployment, such as on-premise, cloud-based, or hybrid cloud.

End-use: This segmentation is based on the different industries or sectors that utilize data center networking solutions, such as banking and finance, healthcare, government, and IT and telecom.

Application: This segmentation is based on the different applications or workloads that are supported by data center networking solutions, such as cloud computing, big data analytics, and virtualization.

Geography: This segmentation is based on the geographical regions where data center networking solutions are deployed, such as North America, Europe, Asia Pacific, and the Rest of the World.

Overall, these different segments provide a way to better understand the different use cases and requirements of organizations in the data center networking market. By segmenting the market, vendors can better tailor their products and services to meet the unique needs of specific customers and industries, and provide more targeted solutions that can drive growth and increase market share.

Global data center networking market segmentation is based on the component, end user, and region.  Based on the component, the market is segmented into solution and services. Based on the application, it is segregated into colocation, BFSI, energy, manufacturing, government, healthcare, IT & telecom, and others. Based on the region, it is segregated into North America, Asia Pacific, Europe, Latin America and Middle East and Africa. 

Data Center Networking Market Regional Synopsis

North America: North America is one of the largest markets for data center networking solutions, with the United States being a major contributor to the market. The region has a strong demand for cloud computing and virtualization technologies, which is driving growth in the data center networking market.

Europe: Europe is another significant market for data center networking solutions, with countries such as the UK, Germany, and France being key contributors. The region has a high adoption of advanced technologies such as cloud computing and big data analytics, which is driving demand for high-speed and reliable networking solutions.

Asia Pacific: The Asia Pacific region is the fastest-growing market for data center networking solutions, with countries such as China, Japan, and India being key contributors. The region has a rapidly growing IT industry, which is driving demand for data center networking solutions that can support high-speed data transfer and reduce latency.

Latin America: Latin America is a small but growing market for data center networking solutions, with countries such as Brazil and Mexico being key contributors. The region has a growing demand for cloud computing and big data analytics, which is driving growth in the data center networking market.

Middle East and Africa: The Middle East and Africa is a developing market for data center networking solutions, with countries such as the UAE and Saudi Arabia being key contributors. The region has a growing IT industry and a rising demand for cloud-based services, which is driving growth in the data center networking market.

Overall, the data center networking market is a global market that is driven by the increasing demand for cloud computing, virtualization, and other advanced technologies. While different regions have unique characteristics and requirements, the market is expected to continue growing globally as organizations increasingly rely on data centers to manage their IT infrastructure and support their business operations.

Data Center Networking Market Recent Developments 

The data center networking market is a dynamic and rapidly evolving market, with new technologies and solutions being developed and introduced on a regular basis. Here are some recent developments in the data center networking market:

Adoption of 5G technology: With the increasing adoption of 5G technology, data center networking solutions are being developed to support the high-speed and low-latency requirements of 5G networks. This is expected to drive growth in the data center networking market as more organizations adopt 5G technology.

Increased use of artificial intelligence (AI): The use of AI in data center networking solutions is increasing, with AI being used to automate network management and optimize network performance. This is expected to improve network reliability and reduce the complexity of data center networking environments.

Rise of software-defined networking (SDN): SDN solutions are becoming increasingly popular in data center networking environments, as they offer greater flexibility and scalability compared to traditional networking solutions. This is expected to drive growth in the SDN market, which is a key segment of the data center networking market.

Expansion of cloud-based data center networking solutions: Cloud-based data center networking solutions are becoming more popular, as they offer greater flexibility, scalability, and cost-effectiveness compared to traditional on-premise solutions. This is expected to drive growth in the cloud-based data center networking market.

Increased focus on network security: As data breaches and cyberattacks become more common, organizations are investing in network security solutions to protect their data and systems. This is expected to drive growth in the network security market, which is a key segment of the data center networking market.

Covid Impact Analysis

In 2022, the COVID-19 epidemic has significantly hampered growth of the Data Center Networking market due to stringent lockdowns imposed in several countries. Halts in data center construction projects due to stringent lockdowns imposition has led to the decline in growth rate of the market during the year 2022. However, the market will witness growth in 2022 due to the proliferation of digital commerce, making digital infrastructure more important than ever before. There is rising demand for the digital infrastructure to be able to offer reliable support across a range of networks and cope with substantial changes in demand.  This factor has primarily boosted growth of the data center networking market during the pandemic. In addition, a number of enterprises around the globe are altering their business models and adopting remote working solutions leading to the escalated demand for cloud services fuelling growth of the data center networking market.  

Various countries around the globe have imposed a complete lockdown for more than two months as a result of the COVID-19 epidemic, which has had an impact on most of the industry verticals. However, the impact on the technology sector has been comparatively low. For instance, the manufacturing plants all across the world have been shut down, and automobile sales have plummeted. On the contrary, despite the downturn, the sectors associated with the cloud services, internet service providers (ISPs), information technology (IT) infrastructure, and data centers have experienced huge demand increase as a result of the shift towards home and remote working.

On the other hand, several companies are launching new data centers networking solutions during the pandemic, further boosting growth of the market. For instance, in June 2021, NTT Ltd., a global technology services provider launched Global Data Center Interconnect (GDCI), an integrated global network fabric service that provides secure and private connections between NTT’s global data centers and cloud service providers with a single physical port that supports multiple virtual network services.

Top Impacting Factors

Adoption of digitalization across several industries has significantly accelerated the demand for cloud services to optimize business operations, leading to the growth of the data center networking market. For instance,  as per the Oracle’s Cloud Prediction 2019, 80% of all enterprise (and mission-critical) workloads are projected to be moved to the cloud.  In addition, the factors such as significant growth in demand for high-speed internet and increased productivity of enterprises owing to dependability on the data centers expected to propel growth of the market. 

Moreover, the data center virtualization trend along with the adoption of advanced data center operating models has boosted demand for the data center networking solutions. 

However, irregularities in the data protection regulatory scenario as well as increasing complexity of data center designs may hamper growth of the market during forecast period.  

On the other hand, surge in implementation of technologies, such as machine learning, artificial intelligence (AI), and 5G have boosted the cloud computing market. This in turn supports the demand for high performance data center networking solutions. This factor has creates lucrative growth opportunities for the market growth during the forecast period.  

Regional Analysis

On the basis region, the Global Data Center Networking Market is segmented into North America, Asia Pacific, Europe, Latin America and Middle East and Africa. North America accounted for the largest share in the Global Data Center Networking Market. This is mainly attributed to the upsurge in data generation as well as the increasing transition to cloud-based solutions in the U.S. and Canada has propelled demand for data centers in the region. Moreover, the growing competition among market players, such as Equinix Inc. and Digital Realty in the colocation industry in the U.S., will boost the demand for data center networking solutions.

However, the Asia-Pacific is expected to grow at the highest growth rate during the forecast period. Growth of this region is mainly driven by the growing popularity and adoption of cloud computing technology, mainly across China and India. In addition, upsurge in the demand for data centers that can safeguard and secure and information drives growth of the Asia-Pacific data center networking market. Moreover, the robust cloud computing and electronics market in China is projected to support the R&D related to the manufacture of high-performance servers that cater to the modern data center networking requirements, creating growth opportunities for the market growth in the Asia-Pacific.

Latest Trends

There is surge in adoption of hybrid cloud environment by organisations, significantly boosting demand for data center networking solutions.  Hybrid cloud is a combination of private and public cloud which store mission-critical data and applications in colocated servers that are accessible through a private cloud network. The private network is connected to a public cloud service, enabling the data to transition seamlessly among the two environments. 

Hybrid cloud environment provides companies with the visibility and control they need over their data along with the access to expansive computing and functionality of public cloud platforms.

Key Players In Data Center Networking Market

The global Data Center Networking market is consolidated with the presence of major players in the market such as IBM Corporation, Dell Inc., Alcatel-Lucent S.A., Hitachi Data Systems Corporation, Equinix Inc., Cisco Systems Inc., HP Development Company, L.P., Vmware, Inc., Fujitsu Limited, Intel Corporation, and other players.