Service Provider Data Center 1Q Trends

  • 1st quarter 2022 showed the impact of supply chain constraints on deliveries and recognizable revenue, though demand (indicated by vendor backlogs) remains strong
  • Year-on-Year results of 19.5% overall growth show the strength of the pull in demand from cloud and network providers as each of their infrastructures continue to be central to economic activity in pandemic impacted times, and their capacities continue to grow
  • The value of software in data center deployments continues to increase as well, shown in one case by the 36% year-on-year growth in SDN Control Software versus 20% growth in physical switching and routing infrastructures from the prior year
  • Growth in analytics to support operations is particularly strong, indicated by the 41% Y-o-Y growth in Service Control Applications within the overall SDN Control Software category
  • A seminal development indicating long term shifts in market share composition is that Arista now holds the #1 overall market share position in SP-related data center networks having moved modestly ahead of Cisco in that regard (the same is not true in pure enterprise DCs)
  • A broadening of supplier bases is shown by new entrant NVIDIA's #3 share as well as Accton/EdgeCore's continued strong presence as a supplier of merchant silicon based white box offerings to a wide range of open NOS suppliers
  • NVIDIA's revenue composition is distinct among the vendor base by virtue of the company supplying both 'normal mode' Ethernet and IP switching systems as well as Infiniband clusters in support of high performance computing and AI, which is becoming more prominent in operator deployments and needs interoperability with workloads located in the general purpose cloud
  • A shift in the overlay virtual networking market is occurring as container networking capabilities begin to command a meaningful portion of overlay networking investments (alongside hypervisor-based virtual machine networking solutions) 
  • We expect to see extended side effects of supply chain constraints in the coming two quarters in 2022 alongside continued demand pull from cloud and networking providers as the value of their connectivity and their services continues to expand

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