10gigE Market on the Upswing

Ethernet is entrenched as the network technology of choice in buildings everywhere. Ethernet usage has spread from corporate LANs to home networks and service provider metro networks. Ethernet is a standard feature on many devices, including desktop computers, servers, laptops and printers. Ethernet has universal appeal because it is based on standards and is less expensive than other networking technologies. Service providers increasingly use Ethernet to connect and interconnect all sorts of equipment in their networks, including routers, carrier Ethernet switches, optical gear (WDM and SONET/SDH), DSLAMs, other broadband aggregation equipment, and to connect their customers. Ethernet ports at speeds of 10/100mbps and 1gbps are staples on telecom and datacom gear, and perhaps are growing toward ubiquity.

So, it is no surprise that the 10gbps Ethernet (10gigE) market is growing.

Recent research conducted by Infonetics Research indicates that the 10gigE market, which already was worth more than $2 billion in CY06, was expected to double yet again in 2007. Enterprises are the chief users of 10gigE technology at this time — they deployed about 75 percent of the ports in 2006. However, much of the future growth will be driven by service provider use. Why are service providers and enterprises interested in deploying 10gigE in their networks? The answers lie in fundamental Ethernet and bandwidth trends.

Network traffic growth never stalls or retreats, and the 10gigE market is driven by a confluence of two competing factors: the need to expand and upgrade networks constantly, and the need to keep expenditures in check. Ethernet, and specifically 10gigE, allows enterprises and service providers to satisfy both of these requirements.

Bandwidth and applications follow predictable patterns. Consumers, businesses, service providers, and other organizations find or invent new uses for their networks, and these new uses usually drive more bandwidth consumption. New technology is developed to deliver an excitingly greater amount of bandwidth, which in turn inspires the development of new applications that consume that bandwidth. With 10gigE, once again we are in a pattern where innovation dramatically increases the amount of bandwidth available for which it is hard to conceive a use. But soon, new applications will be developed or invented, due to the very fact that more bandwidth is available, and capacity eventually is used up.

Michael Howard

We saw this when 56kbps modems appeared, and it was hard to imagine how to fill up the dialup pipes. The simple idea of adding graphics to Web pages (as opposed to text-only Web pages) was enough to overwhelm 56kbps pipes.

The move to broadband took care of the 56kbps bottleneck, but file sharing, MP3 downloads, and the recent surge in short video streaming are filling pipes again. Already, new applications are on the horizon that promise to max out available bandwidth: IPTV and viewing full-length, high-definition feature movies. While rollouts of these types of services are still at a very early stage, widespread adoption will put a significant strain on networks.

The current pattern of Internet usage is causing significant traffic growth for service providers. Unfortunately, the correlation between traffic growth and revenue is not 1:1; traffic may double, but providers cannot charge double. 10gigE allows service providers to balance these two realities.

Matthias Machowinski

Bandwidth needs at enterprises are driven by certain applications and behaviors. Among the chief traffic drivers are enterprise software applications, such as large spreadsheets and PowerPoint files traversing the network, as well as users accessing centralized database programs. For many businesses, data is the lifeblood of their organization, and if systems or networks go down, productivity plunges. As a result, enterprises rigorously and frequently back up their data to avoid major disruptions to their businesses. In addition, there is a need to archive data once it no longer is actively used, often for regulatory purposes.

There are niche applications that aren’t used by everyone, but still have a big impact on bandwidth. Imaging applications come to mind — they’re more often found in specific verticals like health care, finance and engineering — as well as video conferencing. Given the sheer size and consumption associated with these applications, it only takes a few users to generate a lot of traffic.

The vast majority of 10gigE delivered to date is fiber-based, but copper-based products are starting to make an impact. The 10GBase-T standard, finalized in June 2006, uses Cat 6 cabling, and increases distance limitations from 15 meters for the current CX4 standard to about 100 meters. 10GBase-T networking promises to lower pricing for 10gigE gear significantly, and products should hit the market very soon, which should be appealing to medium-size organizations.

Meanwhile, service providers have been deploying 10gbps wavelengths and 10gbps SONET/SDH equipment for some time, and 10gigE is growing fast on routers and carrier Ethernet switches. With 40gigE and 100gigE on the horizon — ensuring the future of the market — and 10gigE prices coming down, we expect buyers will feel safe about diving into 10gigE purchases even though it might be well ahead of their actual need for 10gigE.

All of these events should keep the market growing at a fast pace for the foreseeable future, and make it an exciting one to watch.