Interview with Green: the development status and future development trend of switch industry

Since the first Ethernet switch appeared in 1989, Ethernet switch has developed for more than 30 years. What changes have taken place in the switch industry over the past 30 years? What is the current overall development status? What will happen in the future? We invited Green from switch division of C-Data to solve these puzzles for us.

 

Jane: What do you think about the overall development of the Ethernet Switch market?

Green:Since the first Ethernet switch appeared in 1989, the Ethernet switch has gone through three stages: hub, bridge and Ethernet switch. It has been developed for more than 30 years.

In this process, its performance and function have been greatly improved. Today’s Ethernet Switch not only complete Layer 2 forwarding, but also Layer 3 forwarding based on IP addresses. There are even Ethernet Switch working on four or higher layers.

Secondly, Ethernet Switch have been widely used in a variety of network scenarios. It exists in the home network, enterprise network, ISP network and even the Internet.

At the same time, with the rise of new technologies such as 5G,IoT, WIFI6, Cloud Data Center, the Ethernet Switch market also encounters new opportunities and challenges. For example, in our safe cities and IoC(Intelligence of City), bandwidth requirements have become greater.

 

Jane: Therefore, in the past many years of development, there are more and more types of Ethernet Switch, which can be used in more and more application scenarios, and the market demand is also growing.

Green:Yes, under the development trend of interconnection of all things and data network, switch, as a key equipment, is widely used and has huge market demand.

 

高长青

Jane: Now that the market demand for Ethernet Switch is growing, what is the growth rate?

Green:About this question, we can analyze it from two dimensions: domestic market and global market.

Over the past few years, China’s entire information technology construction has been very rapid, so the market demand for Ethernet Switch has been growing fairly fast.

I have seen a data: the size of China’s switch market increased from 12.25 billion yuan in 2014 to 54.85 billion yuan in 2020, with a compound annual growth rate of 14.5%. The domestic switch market will continue to grow by 10 digits in the next few years.

Looking at the global market, we can see from the relevant data that in the first half of 2021, the global network market (Switch, Router, WLAN) was 24.8 billion dollars, of which Ethernet Switch accounted for more than 60% and the market grew by 9.3%.

From these data, we can see that domestic market and the global market will continue to grow at a high speed in the future. However, China’s pace of information construction is slightly faster than the global pace, so our growth rate will be higher than the global average.

 

Jane: What are the characteristics of demand in the current switch market?

Green:I think there are several main aspects.

First, the price competition is very fierce, and the switch industry has become the Red Sea market. After so many years of development, the industrial chain of Ethernet Switch has been very mature, the technical threshold has been reduced, and market demand still exists, thus attracting a large number of manufacturers to enter this industry. When customers can choose too many products, price competition between manufacturers and manufacturers will be fierce, and even irrational competition will occur.

The principle of C-Data is to meet customer’s needs with high quality products and comprehensive service capabilities, we do not participate in vicious competition. Especially since the impact of the epidemic since 2020, international and domestic supply chain tension trend appears, raw material prices rise significantly, irrational price competition is to drink poisons to quench thirst.

The second feature is that the industry segmentation is very obvious. For example, the security industry and the education industry use different Ethernet Switch. Why is RuiJie doing so well in the education industry? Because they have customized Ethernet Switch for the education industry.

The third feature is that integrated solutions are popular with customers. Now the customer’s demand is not just to purchase a single product, but to get comprehensive solutions and services from the manufacturer.

It happens that this is the unique advantage of C-Data. After the development of 12 years, C-Data focuses on PON(Passive Optical Network) products and services, and has formed a complete R&D, production delivery, technical service system. Switch products and PON products are the key devices of data networks. Customers need both types of products, so our entry into the switch market is in line with customers’expectations for one-stop purchasing and unified technical services.

The fourth feature is the increasing specialization. Especially in cloud services and data center applications, customers have some customized requirements for Ethernet Switch. For example, in some voice service Data Centers, you need to customize some of the features that customers need, including some of the features of their Data Centers.

 

Jane: Based on the current market characteristics, what do you think will be the future trend of market demand in the switch industry?

Green:With the emergence of 5G, IoT, WIFI6 and other emerging technologies, user demand has changed from front-end access to core exchange. These changes are dominated by bandwidth growth.

The main trends include: from Gigabytes to 2.5G; from 10G to 100G; the types of Ethernet Switch also range from general access switches to gateway switches of the IoT, PoE switches, cloud management switches, SDN switches, etc.

 

Jane: What can we do in the face of such demands and changes? Or what have we done?

Green:In the face of changes in market demand, we have made corresponding preparations.

To meet the requirements of 5G, WIFI6 and other technologies for large bandwidth, we have introduced 10G uplink access switches.In the middle of  next year, we will also launch 2.5G switches.

In terms of comprehensive solutions, we will combine our existing products to provide some partial solutions. For example, cloud storage, routers and other products are used to build LAN solutions for smart home.

54 ports switch

 

Jane: What’s the best switch product for C-Data at the moment? What are the advantages of this product?

Green:At present, industrial switches are the most frequently asked for quotes in C-Data’s switch products.

But the hotest product is the 5,8-port MINI switch, which is an unmanaged switch. It has the advantages of plug and play, Gigabit rate, green energy saving, compact and space saving, so it is very popular in the market.
Jane: C-Data‘s switch product line is not perfect yet. What is the plan for the future?

Green:At present, our products are mainly targeted at the business market, which can meet most of the network access layer application scenarios in enterprise, security, transportation, electricity, energy and other industries.

There are two main product series, one is Commercial Switch and the other is Industrial Switch. Commercial switches are dominated by 24,48-port access layer switches. Industrial switches are mainly 4,8,16-port access layer switches.

Our recent strategy is to do a good job in the access layer, which is one of the most demanded switches. The focus of product development in the future will be on the development of ISP level switches.

 

Jane: There are already many Ethernet Switch brands on the market. Is it too late for C-Data to produce a Ethernet Switch now?

Green:There is an old Chinese saying, “Good food is not afraid of late”.

C-Data decided to produce Ethernet Switch, not just for a moment. As early as 2019, we have been planning the product line of the switch, but this year we formally established the switch business.

There are so many switch brands in the market, why should we do it?

There are two reasons: one is based on market demand, the other is based on our existing technology accumulation.

From a market perspective, we make Ethernet Switch just in time. In the special market background of global chip shortage and rising raw material prices, many manufacturers are unable to cope with it for a while, resulting in difficulties in product delivery and unsatisfactory customer needs. After 12 years of development, C-Data has been able to cope with such market changes in product development, production delivery and technical services.

In an occasional opportunity, an Indian customer who has long purchased our PON products told us that they have a need to buy switch products, but because of the shortage of global chips, the supplier with whom they had previously cooperated has had difficulties supplying them. The manufacturer has priority in guaranteeing the supply of other large orders and is unable to complete their orders.

After trying to cooperate with us in switch products, they expressed excitedly that C-Data can not only help them solve the problem of order delivery and ensure a stable supply. Services of one-stop purchasing can also greatly help them to save manpower, material resources, financial resources and time costs in the freight process. After long-term cooperation, they are also very confident about our professional technical support team.

Therefore, the success of this cooperation tells us that providing customers with switch products and services is a win-win move for both us and customers.

 

Jane: Our PON products are already well known in the market, but our switch products are always in doubt because they are just starting to do it. What do you think?

Green:In the face of any new thing, the market needs a reaction process, and it is normal for customers to have such doubts.

We have been producing Ethernet Switch for a short time, but at present, through extensive publicity and active sample delivery, more and more customers have expressed considerable interest in our Ethernet Switch.

Moreover, in the process of product promotion, we found that our PON product customers are often the first to accept our switch products because they have already purchased our PON products and recognized our quality, delivery ability and customer service. Therefore, as an excellent business card, PON plays a very positive role in the process of customers understanding our switch products.

The company has support, sales are enthusiastic, we have confidence in our products, how can we not succeed?

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