Canadian Manufacturing

US companies invest in switched ethernet services to connect to cloud-based applications

Enterprises are evaluating the benefits of fixed versus usage-based network services to align with pay-as-you-go cloud-based services

April 23, 2021  by CM Staff

ethernet

SANTA CLARA, Calif. — Frost & Sullivan’s recent analysis finds that continued demand for bandwidth and cloud connectivity needs are sustaining Ethernet demand in the United States business markets. Market maturity, downward pricing pressure, and lack of sustained demand for point-to-point Ethernet services with SD-WAN (software-defined wide area network) will result in the market dropping from US$6.35 billion in 2021 to US$5.94 billion by 2024.

COVID-19 has forced many enterprises to alter their strategies, while some have decided to hold off on making network purchase decisions, others invested in site upgrades because there was a demand for increased bandwidth. This study presents key trends, market revenue and ports forecasts, a market share analysis, and growth opportunities. It is segmented by transport distance (metro versus long haul) and service type (dedicated or port-based services versus switched or VLAN-aware services).

“Although the market is declining, there is still demand from enterprises that consume Ethernet services for their flexibility, scalability, and reliability,” said Gina Sanchez, Industry Principal, Frost & Sullivan in a statement. “There will be a sustained call for switched services (Ethernet virtual private line (EVPL) services, in particular) since companies benefit from purchasing a single user network interface (UNI) port and creating multiple Ethernet virtual circuit (EVC) to share the bandwidth among different applications.”

Sanchez added: “The adoption of Ethernet by enterprises to connect to cloud-based applications is driving the demand for dynamic bandwidth capacity on Ethernet networks. Enterprise users are evaluating the benefits of fixed versus usage-based network services to align with pay-as-you-go cloud-based services.”

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Market participants should closely look at the following growth opportunities:

  • Support for Continued Demand for Bandwidth: As enterprises seek higher-capacity ports to support the growth in bandwidth-hungry applications, network service providers (NSPs) must offer speed configurations, ensuring the service’s reliability through strong service-level agreements (SLAs) and performance management solutions that build customer trust.
  • Cloud Connectivity and Cloud Services: As companies focus on network performance and reliability, NSPs must provide flexible and scalable approaches to Ethernet services. Expanding footprint and network is also important.
  • Focus on Customer Experience: Metro Ethernet Forum (MEF)-defined products are a basic feature, and network service providers should focus on the customer’s digital experience to differentiate their offerings (portals, systems, and processes).
  • Leverage Dynamic Ethernet Services: Service providers should give customers greater control over their network and bandwidth efficiency. Dynamic Ethernet, or bandwidth on demand, is important.