Dell'Oro Data Center Switch Report: The Market Is Choosing Ethernet for AI

Dell'Oro Group just released their 4Q 2024 Ethernet Switch - Data Center Report showing record-breaking sales fueled by AI buildouts and a recovery in traditional front-end networks. The data reinforces trends we've been tracking closely.

The numbers tell a clear story

The Dell'Oro report provides valuable confirmation of key market dynamics. While AI GPUs get the headlines, networking infrastructure is emerging as both the critical enabler and potential bottleneck for enterprise AI adoption.

Look at the port speeds: 200 Gbps, 400 Gbps, and 800 Gbps were the only high-speed ports to see shipment growth, collectively representing nearly 40% of total port shipments and 50% of total sales. This reflects the market's shift toward high-performance networking specifically designed to support AI workloads.

The market is choosing Ethernet for AI

The report highlights Arista, Celestica, NVIDIA, and Ruijie capturing the bulk of the sales increase. What's really interesting here is what's happening beneath the surface - the market is overwhelmingly choosing Ethernet over Infiniband for AI networking needs.

Despite NVIDIA's push to sell their expensive Infiniband solutions and their messaging that customers need Infiniband for peak performance in GPU networks for AI workloads, this report builds on previous findings from Broadcom showing hyperscalers predominantly selecting Ethernet. The trend is clear: more organizations are choosing Ethernet to deliver their AI networking requirements.

The Ethernet networking industry has demonstrated that Ethernet can not only match but exceed Infiniband performance while offering substantial cost advantages. This explains why Celestica captured the highest share gain during the quarter - the market is voting with its wallet for open, high-performance Ethernet solutions.

AI is driving front-end network recovery

Dell'Oro's report notes "The recovery in front-end networks began with Cloud Service Providers in early 2024, but4Q 2024 marked the first quarter where we saw a return to growth in spending from large enterprises". What's particularly telling is that this recovery in front-end networks is itself driven by AI.

The port speeds and devices clearly indicate that organizations aren't just reinvesting in front-end networks - AI is the catalyst driving this resurgence. These providers are upgrading their networks with the speeds and features specifically required for AI's front-end networking demands.

This validates what we've seen in customer conversations - organizations need comprehensive AI networking solutions that address both back-end GPU interconnect requirements and front-end network demands with high-performance Ethernet.

Ethernet dominates across the full AI infrastructure stack

As I noted in our previous blog, NVIDIA reported that 40% of their Q4 data center revenue came from AI inference, with the rest focused on training and fine-tuning. What Dell'Oro's report confirms is that Ethernet is winning across this entire spectrum of AI workloads.

The port speeds tell the story: 200/400/800 Gbps shipments are growing for both backend GPU networks (training) and front-end networks (inference). The market is choosing Ethernet for its versatility across the full AI stack because it delivers what both environments demand:

• High effective bandwidth
• Zero packet loss
• Low latency
• A cloud-like user experience

The Hedgehog advantage

Hedgehog is positioned at the intersection of these market forces. We deliver the AI network that enterprises and sovereign AI clouds need without the premium price tag or vendor lock-in of traditional solutions.

Our software-defined approach provides the performance required for AI workloads with the features and familiarity of Ethernet. We deliver high effective bandwidth, zero packet loss, and low latency alongside a cloud user experience that makes it easy to operate and use AI cloud networks.

Our open network fabric software provides the same type of highly automated network platforms used by the world's largest hyperscalers, delivering simplified VPC network APIs that have proven to meet the rapidly changing demands of AI and its impact on modern software and businesses.

Time is money with expensive GPU infrastructure

Traditional TCP/IP networks signal congestion with packet loss, causing AI workloads to pause or fail. Restarting at the last checkpoint wastes expensive GPU time. With the cost of GPU infrastructure, network efficiency directly impacts the bottom line.

With fully automated network operations, our customers can network like hyperscalers with low operating costs and dynamic cloud capacity, maximizing the utilization of their GPU resources.

The bottom line

The Dell'Oro report confirms the market is moving toward high-performance Ethernet for AI networking. As AI workloads continue to evolve from training to fine-tuning and inference, this trend will only accelerate.

Hedgehog delivers the open network fabric software that makes enterprise-grade AI infrastructure accessible and manageable. We provide the cloud-class networking services and operational efficiency that organizations need to keep pace with AI's rapidly evolving demands.

For more information about how Hedgehog can help you build and optimize your AI infrastructure, visit https://hedgehog.cloud and click the DOWNLOAD button.