Cloud services are fundamentally supported by Data Center Networks (DCNs). With the fast growth of cloud services, the scale of DCNs increases rapidly, leading to a big concern on system scalability due to multiple constraints. Based on optical switching and transmission, this paper proposes a scalable DCN architecture with distributed placement of optical switches and server racks at different nodes in a given optical network. This solves the scalability issue by relaxing power and cooling constraints, and reducing the number of (electronic) switches using high-capacity optical switches, as well as simplifying internal connections of the DCN using wavelengths in the optical network. Moreover, the distributed optical switches provide service access interfaces to demands in vicinities, and thus reduce the transmission cost of the external traffic. The major concern is the additional delay and cost for remote transmissions of the DCN internal traffic. To this end, we study the component placement problem in DCNs under a given set of external demands and internal traffic patterns. By leveraging among multiple conflicting factors such as scalability and internal overhead of the DCN as well as the transmission cost of external traffic, we propose an ILP (Integer Linear Program) to minimize the overall cost of a DCN while satisfying all service demands in the network. This addresses both scalability and cost minimization issues from a network point of view.