Our digital world has come so far in a relatively short time, and we owe so much of that advancement to networking technology. In fact, measuring the volume of data exchanged over global networks is one of the best ways to assess the growth of the digital economy. The Global Interconnection Index (GXI) 2023, a market study published by Equinix, forecasts that interconnection bandwidth will grow at a 35% CAGR over the next five years in every region and major metro across the world. This shows that the global movement of data will continue to play a key role in unlocking new business value for digital enterprises.
Today, companies have more choice than ever when it comes to their networking technology. They have on-demand access to both physical and virtual connectivity in many locations throughout the world. Their biggest challenge may be finding the right mix of both options to support the unique requirements of their different workloads.
In this blog post, we’ll take a quick look at how networking technology has evolved, from the early days of physical connectivity to the launch of software-defined networking. We’ll also look at the role each one plays in optimized hybrid networking. Finally, we’ll examine common networking use cases and look into the future.
Examining the evolution of networking over the years
In a way, physical networking really hasn’t changed that much since the early days of subsea cables. Although the volume of data is now orders of magnitude higher, the basic idea of a physical connection to transmit data over long distances is the same. Even our most advanced emerging technologies still rely on the humble physical cable in some way.
More recently, we saw the growth of cloud computing and Infrastructure as a Service offerings. Companies managing massive amounts of hardware began to sell compute, network and storage capacity via a subscription model. This shifted the business model from companies having to acquire, rack, stack and manage physical hardware to using services on demand almost instantly. This also allowed companies to shift from a CAPEX model to an OPEX model to fund their IT infrastructure.
These virtual network connections are more agile and flexible than their physical counterparts. Companies can now set up a network connection to move data from one location to another in a matter of minutes. As the needs of the business change, they can change the connection accordingly, without needing to touch the hardware upon which the connections were built. This frees up companies from having to deploy and manage physical gear.
Which use cases are ideal for hybrid networking?
A common misconception is that virtual networking is a more advanced replacement for physical networking, and that physical connectivity will become less important over time. This is absolutely not the case. The best way to do networking is using a hybrid approach that enables the best of both worlds: the scalability of physical with the flexibility of virtual. By formulating a hybrid networking strategy that uses both physical and virtual connectivity for different use cases, enterprises can optimize performance, reliability and security.
Use cases for physical networking
Physical connections are a good fit for any use case that requires direct access to digital ecosystem partners in a particular location. Working with a densely interconnected colocation provider like Equinix, you can connect directly to cloud providers, network service providers and more, all from within the same facility. These direct connections are ideal for exchanging high levels of sustained traffic with particular partners. They can also help ensure optimized performance, very low latency, and built-in security and reliability. Finally, deploying those connections on the same platform you use for your colocation services can help support greater ease of management and flexibility.
A specific example of this can be found in the gaming industry. Developers often rely on cloud services to power their games, and even a few extra milliseconds of latency when accessing those cloud services can noticeably degrade the player experience. Creating a physical connection to cloud providers from within the same data center can help gaming companies keep latency reliably low.
In addition, protecting data from unauthorized access or tampering is an important aspect of any hybrid networking strategy. Physical networking is typically the best choice to move extremely sensitive data sets. This might include patient data in the healthcare industry, which is subject to extremely strict data privacy requirements. A direct physical link between two systems offers the highest degree of privacy because it minimizes the possible points of data exposure.
Use cases for virtual networking
Virtual connections are ideal for use cases where data routing or capacity requirements are likely to change frequently. For example, media companies that broadcast major global sporting events may experience sharp—but temporary—increases in the volume of traffic they need to move. It wouldn’t be cost-effective for them to invest in physical network infrastructure to meet their capacity needs, as they know their traffic levels will return to normal once the event is over. Virtual networking gives them the flexibility to increase capacity temporarily without having to overpay to do so.
In addition, the flexibility of virtual networking can be extremely helpful for any use case that involves moving data within a hybrid multicloud environment. Hybrid multicloud networking is inherently complex, as it requires multiple links across clouds and on-premises locations. For example, an enterprise that runs its database and its analytics tools in two different clouds would typically need to move its data from one cloud to the other via its on-premises data center. This would require two separate links across three different environments to support a relatively simple use case.
Virtual solutions can help simplify hybrid multicloud networking. Enterprises can connect multiple cloud environments in a matter of minutes and then change their connections flexibly as their cloud needs change. Virtual solutions can also connect workloads spanning data centers in various regions.
What’s next for physical and virtual networking?
Today’s enterprises face the challenge of handling rapidly growing data volumes while also needing to interconnect more globally distributed locations than ever before. This means it will only become more important for enterprises to use both physical and virtual networking technologies to their full potential.
At Equinix, our customers continue to deploy both physical and virtual connections. While it’s true that customers are adding new virtual connections at a faster rate than new physical connections, the total number of physical connections in the Equinix ecosystem remains significantly higher.
To keep up with data growth and enable advanced digital applications, both physical and virtual connections will grow more advanced over time. In the case of physical connections, new fiber-optic capabilities will increase cable capacity. Even as data volumes grow, enterprises will be able to scale their physical connections efficiently to keep up with that growth.
The launch of new SDN capabilities means that virtual connections will become faster, provide support for newer technologies, and grow more cost-effective. In turn, this means they will become viable across a wider variety of use cases than in the past—including new and emerging use cases. For instance, we recently announced the availability of new high-bandwidth virtual connections to cloud providers, which could be extremely useful for customers looking to tackle AI and other data-intensive use cases.
Virtual networking also has a role to play in a comprehensive cybersecurity strategy. New intelligent traffic monitoring capabilities are emerging all the time. This makes it easier for enterprises to leverage advanced SDN capabilities while identifying anomalies and threats as they arise. New encryption capabilities also allow enterprises to protect data moving over virtual connections without having to sacrifice performance or flexibility. For instance, Equinix recently partnered with Oracle Cloud for a successful validation showing how customers can use MACsec encryption on a global scale to protect data moving to the cloud.
As both physical and virtual networking technology continue to become more advanced, neither will replace the other. Instead, the value of a hybrid networking strategy will only continue to grow. The organizations that do networking best will be able to leverage both methodologies to get the best possible results across their workloads.
Platform Equinix enables the future of hybrid networking
As the world’s digital infrastructure company®, Equinix is uniquely positioned to meet the hybrid networking needs of enterprises and service providers throughout the world, now and into the future.
Equinix customers can choose between physical Equinix Cross Connects and Equinix Fabric® for virtual connections that are quick and easy to deploy. Customers can deploy one or both options in many different locations throughout the world, using them to bring together their own distributed digital infrastructure or to connect with their ecosystem of partners and service providers.
To learn more about how both physical and virtual networking are driving the growth of the digital economy, and how we can measure that growth using interconnection bandwidth, read the GXI 2023 market study from Equinix today.
 Interconnection bandwidth is a measure, calculated in bits/sec, of the capacity provisioned to privately and directly exchange traffic between two parties, inside carrier-neutral colocation data centers.