We headed into our July forecast cycle expecting Microsoft to be the only company pushing 25 GE, but right before the July 4th holiday, we added Google to what is becoming a growing list.  Our Cloud interviews indicate that many Cloud providers, both large and small, are likely to adopt 25 GE.

So, let’s look at what we do know and what we don’t know about the environment for 25 GB adoption and how that impacts the data center market.

We Know:

Every day the mega Cloud customers and the market are becoming more excited about 25 GE and less excited about 40 GE.

There is a lot of talk about the 25 Gigabit Ethernet Consortium growing larger, including Cisco and the other large Ethernet switch vendors.  We believe the consortium will probably include all of the major vendors by the end of the year.

Our forecast for 25 GE now exceeds our 40 GE projections in our Controller and Adapter report.  This is because of the Cloud’s adoption of 25 GE, and also the fact that our revenue forecast for 100 GE in the Ethernet switch market now also exceeds 40 GE.

25 GE will likely tip the scales towards 100 GE because it is far cheaper on a Per Gigabit of Bandwidth basis.  The Cloud is more likely to adopt low cost solutions – some standards-based and some proprietary.

The Cloud’s adoption of low-cost solutions is expected to cause 40 GE to become a niche technology.  So, next generation Top-of-Rack switching, regardless of the server-facing port speed, will likely adopt 100 GE uplinks and 100 GE spines.

Cloud providers are also anticipated to adopt 50 GE quickly for server access, shortly after the adoption of 25 GE.

We Don’t Know:

How will 50 GE be implemented?

Will it be two lanes of 25 GE, or will there be a 50 GE SerDes for single lane 50 GE solutions?

How will the enterprise market adopt 25 GE?

We know a true standard is needed to adopt 25 GE, and speed standards are political in nature for the Ethernet market.

What is the form factor for 25 GE?

Enterprises do not like splitter cables, and this mindset is not going to change.  Therefore 25 GE in the enterprise must take the form of an individual port on the switch.  It is not clear if that will be SFP+, QSFP28, or a new form factor.  It is in the market’s best interest to spend some time here and create a form factor for the switch and server that will last through 100 GE at short distances.

In which Ethernet silicon cycle will enterprises adopt 25 GE?

Given most enterprises are still on 1 GE, there is no rush.  However, if the mega Cloud customers move to 25 GE in 2015/ 2016, mass enterprise adoption is likely to happen in the next one to two Ethernet switch silicon versions after that.  In our view, the next silicon cycle in 2017/2018 makes sense for early enterprise adoption of 25 GE, but enterprises might still be satisfied with 10 GE at that point. So, it may take until the end of the decade for enterprises to move off of 10 GE.

This is an important issue for the market because in looking ahead to 2020 there will be significant fragmentation, many Cloud providers will be at 50 GE or 100 GE for server access while enterprises will still be on 10 GE moving to 25 GE.  This will require the Ethernet Switch vendors to support a significantly larger portfolio of data center switches compared to what they offer today, which may be a struggle for some vendors.

While there is still so much that is unknown, it is clear that 25 GE server access will have a major impact on the data center space.  As a technology insertion point, it creates an opportunity for many vendors, but will also place additional stress on vendors throughout the supply chain, likely prompting additional consolidation as we make this journey.


Alan Weckel

Posted by Alan Weckel on August 20, 2014

About Alan

Alan Weckel is Vice President of Enterprise Telephony and Ethernet Switch market research at Dell’Oro Group. He joined Dell’Oro Group in early 2006 and is also in charge of the firm's Enterprise and Data Center coverage areas.