Will Enhanced Servers Do Away With Need For Switches?

As more and more servers are virtualized, connections between them are increasingly handled by virtual switches running on the same servers, begging the question, does the top of rack data center network switch ultimately get subsumed into the server?
Advocates say yes, especially given that servers today are packed with multicore processors, additional Layer 2 intelligence and dense optical connectors. Upstream core connectivity could then be provided by optical cross connects that just mov