Enterprise Ethernet Poised for Serious Growth

By Craig Galbraith Comments
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Big things are in store for Ethernet.

A new report from researchers at Ovum says the enterprise Ethernet services market will exceed $62 billion by 2018, with a 13.6 percent compound annual growth rate (CAGR).

Ethernet services revenue grew from $26.5 billion in 2011 to $29.1 billion in 2012. Ovum expects the 2013 total to be $33.8 billion, up another 16 percent.

Regionally, look for steady growth in North America, at 11 percent per year through 2018. The forecast for EMEA is even higher – 14.9 percent CAGR – based on carrier activities in Eastern Europe and the Middle East. In Asia Pacific, excluding Japan, the growth forecast is almost 24 percent based on a growing Ethernet market in China and the ASEAN-5 (Indonesia, Malaysia, Philippines, Thailand, and Vietnam). Japan, the largest Ethernet market in Asia Pacific in 2012 (US $6.5 billion), is projected to continue at CAGR of 5.3 percent.

“Ethernet and IP VPN are the two essential data-optimized WAN connectivity technologies that are supplanting many legacy data connectivity technologies," said Ian Redpath, principal analyst, network infrastructure, at Ovum. “The resilient nature of Ethernet service growth is underpinned by a number of factors. Enterprises continue to combine previously separated voice and data networks into one converged Ethernet network connection, are comfortable in doing so, and are happy to reap the connectivity savings."

Ovum says emerging Ethernet markets in many countries will have a long run of port growth ahead as their fundamental telecom infrastructure improves, enabling more businesses to connect to local and global networks. In the highly developed Ethernet markets, bandwidth-per-port growth will be the story as more bandwidth-intensive applications ride over the top of the Ethernet connection.

“A large-scale optical network refresh is under way worldwide," Redpath added. "The latest wave of network upgrades is enabling the 100GE-as-a-service market to begin. The new multi-terabit optical systems can accommodate 100GE as a service and the communications service providers (CSPs) are starting to roll out 100GE as a service. Ovum projects the 100GE market will start modestly. Deployments are likely in CSPs’ wholesale and high-capacity data center interconnect types of applications, but will broaden in time in major network global hub and data center–dense markets.

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