Data Center Networking Market Size, By Component (Hardware, Service), By Application (Colocation, BFSI, Energy, Government, Healthcare, Manufacturing, IT & Telecom), By Network, By Organization, Forecast 2024 – 2032

Data Center Networking Market Size

Data Center Networking Market was valued at USD 23.8 billion in 2023 and is expected to grow at over 13% CAGR during the forecasted period. Cloud-based services require substantial bandwidth to deliver a smooth and uninterrupted user experience.
 

Data center networking provides high-speed connectivity to support these bandwidth-intensive applications and handles the increasing traffic volumes generated by cloud services. For instance, in 2023, it is estimated that there will be over 30 billion IoT devices connected to networks worldwide. Moreover, rising data security concerns in the IT sector are creating lucrative growth opportunities for the data center networking industry.
 

Moreover, prominent industry players such as Amazon Web Services, Google Cloud, and Microsoft Azure are expanding their data center capacities to meet the growing demand for cloud services and IoT connectivity. Additionally, edge computing investments are expected to increase significantly, with 73% of surveyed companies planning to boost their edge infrastructure budgets in 2024 to support IoT and cloud applications. This is essential as it reduces latency and enhances real-time data processing capabilities, a critical need for IoT operations.
 

Further, the synergistic growth of cloud computing and IoT is catalyzing the expansion of data center networking, underpinned by advancements in software-defined networking (SDN), edge computing, and significant investments by leading cloud service providers. These developments are set to transform data center capabilities, ensuring they can handle the increased data loads and connectivity requirements essential for modern digital ecosystems.
 

High maintenance and start-up costs represent significant challenges in the Data Center Networking Market. Building and operating data centers typically involve substantial investments, often amounting to hundreds of millions of dollars. These costs are spread across IT, networking, and facilities, making financial management complex. Energy consumption, cooling infrastructure, and regular upgrades to handle increasing data loads further inflate operational expenses, thus hampering the market growth.
 

Data Center Networking Market Trends

The data center networking industry is witnessing several key trends reshaping the industry landscape. One significant trend is the increasing adoption of optical networking technologies. Events such as the Optical Fiber Communications Conference and Exhibition (OFC 2024) highlight advances in optical communications. Additionally, companies such as Cisco, Ciena, and Juniper Networks are at the forefront, showcasing these technologies to improve efficiency and performance. Another major trend is the integration of Software-Defined Networking (SDN) and Network Function Virtualization (NFV). These technologies enable more flexible, scalable, and automated network management, addressing the growing complexity of data center environments.
 

Moreover, security landscape has been evolving with a focus on network fabric technology to manage increasing east-west traffic within data centers. This approach provides enhanced visibility and security by leveraging a mesh of connections between access points, switches, and routers. Additionally, the rise of hybrid and multi-cloud environments is driving the need for advanced network automation to streamline operations and improve interoperability among different cloud services.
 

The integration of AI is revolutionizing operations by enabling intelligent network automation, enhancing predictive maintenance, and optimizing resource allocation. AI-driven tools, such as AI/ML-enabled digital twins, are increasingly being adopted to improve efficiency and reliability. These technologies help identify potential issues before they cause disruptions, ensuring seamless performance. For instance, in June 2024, Cisco announced a breakthrough AI cluster solution with NVIDIA that transforms how customers build, manage, and optimize infrastructure and software. The Cisco Nexus HyperFabric AI cluster solution combines Cisco AI-native networking with NVIDIA accelerated computing and AI software, and a robust VAST data store. It is designed to enable customers to focus on AI-driven innovation and new revenue opportunities rather than IT management.
 

Data Center Networking Market Analysis

Based on application the market is segmented into colocation, BFSI, energy, government, healthcare, manufacturing, IT & telecom. The IT & telecom industry held over 26% of the market share in 2023 and is projected to grow significantly over the period of time. In the IT and telecom sectors, data center networking is essential for managing and optimizing data flow across extensive networks. It facilitates high-speed data transmission, supports cloud services, and enables efficient data storage and retrieval. This technology underpins critical services such as virtualization, disaster recovery, and network function virtualization (NFV), allowing businesses to scale operations, enhance reliability, and improve service delivery.
 

Based on the component, the data center networking market is divided into hardware and services segments. The hardware segment held around 77% market share in 2023. Key components of data center networking solutions include high-capacity switches, advanced routers, and network fabrics designed to handle massive data loads with minimal latency. These components are integral for ensuring seamless connectivity, scalability, and security in data centers. Technologies such as Software-Defined Networking (SDN) and NFV are often employed to increase flexibility and automate network management. Various companies are initiating efforts to expand their market globally. For instance, in June 2024, Ooredoo, a leading telecommunications provider in Qatar, announced a significant partnership with Nvidia to deploy advanced AI hardware across multiple data centers in the Middle East. This collaboration marks Nvidia's first major expansion into the region, aiming to enhance AI infrastructure and services in countries including Qatar, Kuwait, Oman, Algeria, Tunisia, and the Maldives.
 

North America holds over 39% market share in 2023 and is expected to expand significantly through 2032. The advanced IT infrastructure, substantial investment in data center expansion, and high adoption of cloud technologies are contributing to regional growth. The region benefits from a robust IT ecosystem and a high concentration of tech giants driving innovation and demand. Additionally, it benefits from a well-established ecosystem with extensive fiber networks and high-capacity data centers, driven by major cloud service providers. Key factors include substantial capital infusion into data center expansion, a strong emphasis on cutting-edge technologies, and a supportive regulatory environment that fosters continued growth and innovation.

Europe follows with significant growth driven by stringent data privacy regulations (e.g., GDPR) and increasing demand for colocation services. Moreover, Asia Pacific shows rapid expansion due to burgeoning digital economies and large-scale investments in IT infrastructure, particularly in countries such as China and India.  Further, governments across major regional economies are investing significantly in providing reliable internet service for the public, which will favor industry growth. In March 2023, the U.S. government announced an investment of USD 65 billion to bring affordable and reliable high-speed internet to the general public in the country. Such investments across geographies are expected to create lucrative opportunities for market growth.

Data Center Networking Market Share

Cisco Systems Inc. and Dell Inc. dominate the market with a market share of over 7% in 2023. Both companies have leveraged their historical presence and expertise in the IT industry to build comprehensive product portfolios that address the full spectrum of data center needs. Their ability to innovate and adapt to emerging trends like cloud computing and software-defined networking has kept them at the forefront of the market. Strong customer relationships, bolstered by reliable support and professional services, have fostered trust among enterprise clients.
 

Data Center Networking Market Companies

Major players operating in the data center networking industry are:

• Robert Bosch GmbH
• Continental AG
• Autoliv Inc.
• Nissin Kogyo Co., Ltd.
• WABCO Holdings Inc.
• Hitachi Automotive Systems, Ltd.
• ZF Friedrichshafen AG
• Denso Corporation
• Haldex AB
• Hyundai Mobis
• Advics Co. Ltd.
• Aisin Seiki
• Mando Corporation
   

Data Center Networking Industry News

• In June 2024, Hewlett Packard Enterprise and Danfoss collaborated to deliver HPE’s IT Sustainability Services – Data Center Heat Recovery, an off-the-shelf heat recovery module that will help organizations to manage and value excess heat as they transition towards more sustainable IT facilities.
   
• In January 2024, IBM announced a collaboration with American Tower, a global digital infrastructure provider, to accelerate the deployment of a hybrid, multi-cloud computing platform at the edge. Through this collaboration, American Tower plans to expand its neutral-host, Access Edge Data Center ecosystem to include IBM Hybrid Cloud capabilities and Red Hat OpenShift.
   
• In June 2023, Cisco Systems Inc., a leading software company, announced the launch of a full-stack observability platform. This new offering brings data together from different domains, such as networking, applications, and others.
   

The data center networking market research report includes in-depth coverage of the industry with estimates & forecast in terms of revenue (USD Million) from 2021 to 2032, for the following segments:

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Market, By Component

• Hardware
  • Ethernet Switches
  • Routers
  • Servers
  • Application Delivery Controller (ADC)
  • Others
• Service
  • Managed Services
  • Professional Services

Market, By Application

• BFSI
• Colocation
• Energy
• Government
• Healthcare
• Manufacturing
• IT & Telecom
• Others

Market, By Network

• Ethernet
• Fibre Channel
• InfiniBand

Market, By Organization Size

• Small and Medium-sized Enterprises (SME)
• Large Enterprises

The above information is provided for the following regions and countries:

• North America
  • U.S.
  • Canada
  • Mexico
• Europe
  • UK
  • Germany
  • France
  • Spain
  • Poland
  • Benelux
  • Rest of Europe
• Asia Pacific
  • China
  • India
  • Japan
  • Singapore
  • Australia
  • Rest of Asia Pacific
• South America
  • Brazil
  • Chile
  • Colombia
  • Argentina
  • Rest of South America
• MEA
  • UAE
  • Saudi Arabia
  • South Africa
  • Rest of MEA