White box vendors have been losing market share in 100GE data center switching market during the past year to the big brands in terms of revenue. The good news (for them) is that’s not a rejection of the white-box paradigm but rather the result of shifting refresh cycles.
According to a recent report by Dell’Oro Group, 100GE adoption for data centers is growing, in part because it’s now priced competitively against 40GE – and at levels that Dell’Oro wasn’t expecting to see until at least next year – and partly because major cloud service providers like Google, Amazon and Facebook began migrating to 100GE at the end of 2016 and through much of 2017.
In fact, Dell’Oro credits sales of 100 GE ethernet switching with underpinning “the entire strength of the data center market”. The report estimates that 100 GE ports will double in 2018 and again in 2019.
The 100GE trend has been good for vendors like Quanta, Inventec, Delta, Celestica, Accton and Foxconn, as the white-box model is a good fit for hyperscale cloud providers, said Sameh Boujelbene, senior director at Dell’Oro Group.
“White box adoption has been mostly driven by few large cloud SPs because they have the financial and engineering resources to either develop their own NOS [network operating system] or use a third party NOS and integrate it on top of white box switches,” Boujelbene told Disruptive.Asia.
However, he added, now that the 100GE refresh cycle is finally hitting other market segments such as Tier 2 cloud providers and large enterprises, “it is benefitting other branded vendors like H3C, Cisco and Huawei since they still dominate these segments of the market.”
Dell’Oro says the share of 100GE revenue for white-box players has declined from 25% in Q3 2017 to 20% in Q3 2018.
As for why Tier 2s and enterprises are generally sticking with the brands, Boujelbene puts it down to two reasons.
First, the capex savings of white-box switches only really pay off for large-scale deployments – for smaller deployments, the money saved on hardware won’t be offset by the operating costs associated with the integration efforts of third-party software.
And second, Boujelbene explains, white-box vendors have longer lead times compared to the brands. “White-box vendors give priority to large-scale customers, while small-scale customers usually sit at the very bottom of the waiting list.”
Even so, white-box vendors have 400GE to look forward to, Boujelbene adds. “We expect white box vendors to be the share leader in the next 400 GE refresh cycle when it starts to materialize in late 2019/2020.”