While a slowdown in IT spending and the commoditization of Ethernet gear has put a damper on the Ethernet switch market recently, new technologies and inevitable upgrade cycles should spark movement in the enterprise switch/router market in the coming quarters.
Ethernet might seem a bit vanilla, but new standards such as 10G Ethernet and the adoption of gigabit switching on the desktop are some areas that excite users and industry watchers.
The long-awaited 10G Ethernet standard was ratified in June, although most major switch vendors had prestandard products on the market since last summer. The next iteration of Ethernet is geared mostly toward carriers and service providers looking to offer high-speed metropolitan-area network services to business customers, but some companies already are looking at the technology as a way to solve some bandwidth issues in the LAN core and on campus networks. Still, with a price range of US$10,000 to US$40,000 per port, the technology is not an affordable option for many business IT buyers now. However, analysts from the Dell’Oro Group predict the price will fall to about US$7,800 per port by 2005.
Counting on desktop gigabit
The cost of gigabit Ethernet has tumbled in the four years since it was introduced. IDC reports the average price for a fixed-configured gigabit Ethernet switch port has dropped to about US$219 per connection, down from US$800 in 1998.
Gigabit network interface cards (NICs) also have come down in price from an average of US$500 in 1999 to an average of US$200 today. Originally a fibre-only technology, gigabit Ethernet over copper has helped spur adoption of 1000Mbps links on servers and some desktops, which are about US$200 to US$300 less expensive than gigabit fibre NICs.
Recent upticks in gigabit desktop ports also might signal that a new LAN upgrade cycle is just around the corner. Dell’Oro Group Inc. says gigabit Ethernet switch port shipments will rise from the 4.9 million ports shipped last year to 51.3 million ports in 2006. Gigabit Ethernet over copper, or 1000Base-T technology, is the major driver behind the gigabit growth.
Dell’Oro analyst Seamus Crehan says 2004 will be the year the rubber meets the road in terms of moving gigabit Ethernet to the desktop, as companies such as Dell Computer Corp., Apple Computer Inc. and Hewlett-Packard Co. begin integrating 1000Base-T ports onto the motherboards of new business desktop PCs as standard practice.
Vendors such as 3Com Corp., Cisco Systems Inc., Foundry Networks Inc. and Dell also are pushing desktop switches that offer 12 or 24 1000Base-T connections.
“I agree that we’re seeing more computer manufacturers adding 10/1000 NICs in hopes [that will] drive the market for gig[abit] to desktop,” says Richard Nelson, a director at the University of Southern California’s (USC) Information Sciences Institute (ISI). “I haven’t seen a whole lot widespread demand for it, but there is some.”
The ISI facility at USC is a research organization that works on projects such as grid computing and mathematical modeling. In a way, the ISI’s network represents the future of wired LANs, because a dozen workers in the centre user gigabit desktop connections for running high-bandwidth scientific applications. This required a recent network upgrade to 10G Ethernet in the core to support the high-bandwidth clients.
“From an enterprise standpoint, I’d really like to see enterprise switch vendors come up with some more higher density 100/1000[Mbps] blades to go on our core switches and routers,” Nelson says.
He says that gigabit server connections and desktops also are driving up bandwidth requirements. For now, Nelson connects gigabit end users and servers to 1000Base-T ports on a large chassis-based Foundry FastIron switch. He says that while the market has rushed to put workgroup 1000Base-T boxes on the market, they do not meet the needs of his network.
“We want switches that will aggregate multiple gigabit lines into the 10-gigabit backbone structure,” Nelson says. “When you only have one [1000Mbps] uplink on a 24-port gigabit switch, you’re not getting much. You’re just getting boasting rights of saying you have gig to desktop.”
Companies with lesser bandwidth needs are putting in new network gear at a slowed pace because of economic reasons, says Josh Johnson, an analyst with Synergy Research. But that doesn’t mean they won’t be looking for more bandwidth in the near future.
“Companies are doing incremental adds to their network, rather than huge deployments,” Johnson says. “They’ll buy exactly what they need for the next month or so, instead of rolling out a huge amount of ports all at once.
Employee head count drives port density
Johnson says most corporations in the last two years upgraded from 10M to 10/100M (otherwise known as Fast Ethernet) at the LAN edge, and from Fast to gigabit Ethernet in the core. Additionally, many businesses poured on the network ports at the height of the economic boom.
“Back when e-commerce was the wave of the future,” Johnson says, businesses were hiring in droves and each new employee needed a network connection.
“Port growth always closely follows head count in large enterprises across the board. When layoffs come, suddenly there’s not so much need for more infrastructure. That’s kind of what we saw in 2001,” he says.
Still, Johnson agrees with other analysts who say that growth in network products, such as 10G and gigabit to the desktop, is inevitable.
“Ten gigabit is a little out there, but it’s coming,” he says. “In the next year or so, we will see gigabit to the desktop as a goal for many businesses. The price points now are so low, it’s kind of a no-brainer to do it for future-proofing reasons.”
Johnson says that buying new PCs with Fast Ethernet NICs might only leave IT departments regretful in the near future. “You’ll be wishing you had a gigabit NIC in a few years, so you might just want to put gigabit NIC in a few years, so you might just want to put gigabit in now,” he says.
