The rapidly growing demand to interconnect data centres will help the optical network equipment market to grow by 3 per cent annually to reach $17 billion by 2019, according to new research from Ovum.
Revenues for data centre interconnect (DCI) equipment have already surpassed $3 billion globally on an annualised basis, with internet content and cloud providers emerging as an important new market segment with significant purchasing power.
“Spending on data centre interconnect is having a material effect on the market, particularly in North America where many of the internet and cloud providers have large networks connecting hyper-scale data centres,” said Ian Redpath, principal analyst at Ovum.
Ovum’s research indicates that internet content providers - whose primary business is the creation, storage, and dissemination of digital information - and carrier-neutral providers are spending heavily on data centre infrastructure, including optical transmission hardware. Shipments of 100G equipment in particular are growing strongly in the internet content and carrier-neutral markets, the market research firm says.
In terms of the broader optical equipment sector, China is the second largest market after North America and is projected to grow 9 per cent in 2014 as Chinese carriers have invested in LTE and fixed broadband roll-outs. Over the next five years Ovum is forecasting a 4 per cent compound annual growth rate (CAGR) for optical network equipment in China.
The rest of Asia and Oceania region is projected to grow even faster, at 4.7 per cent CAGR to 2019. The region is rapidly modernising its network infrastructure and optical networks are being upgraded to support wireless growth, Redpath says.
Spending in Europe and the Middle East has declined over the past year, but is expected to resume growth in 2015, while North America is projected to grow at a 3.2 per cent CAGR between now and 2019 largely driven by DCI applications. North America is expected to be the most important region for data centre interconnect during 2015, particularly for 100G.
According to Redpath, a number of vendors are jostling for market leadership in the DCI market in North America including Adva Optical Networking, Alcatel-Lucent, BTI Systems, Ciena, Cisco, and Infinera. While Alcatel-Lucent and Ciena have been traditionally strong players in the carrier-neutral and internet content provider market in North America, preliminary data up to the third quarter of 2014 indicates that Infinera is the fastest growing company in this sector. Other companies with strong growth in the region include Adva Optical Networking and BTI Systems.
These results are just teasers, with more detailed analysis to follow. Ovum expects to report the full results of its DCI spending study in April 2015.