IHS Markit: Data Center Interconnect (DCI) is Fastest-growing Application for Optical Networking

A significant driver for innovation in the optical market, data center interconnect (DCI) is the fastest-growing application for optical networking equipment, according to a new study from business information provider IHS Markit. Eighty-six percent of service providers polled for the Optical Network Applications Survey have plans to support DCI applications in their networks.

“Data center interconnect is enjoying a meteoric rise as the hottest segment in the optical networking applications space,” said Heidi Adams, senior research director for transport networks at IHS Markit. “Service providers are becoming increasingly invested in the DCI market, both for providing interconnect between their own data centers and for offering DCI services to internet content providers and enterprises. We estimate that service providers will account for around half of all DCI equipment spending in 2018.”

The optical data center equipment market reached $1.4 billion in sales in the first half of 2018, posting 19 percent year-over-year growth, according to IHS Markit. A key driver of the market is the compact DCI sub segment, which notched a 173 percent growth rate during this same time period.

“‘Compact’ DCI equipment is designed to fit within a data center environment from the form factor, power consumption and operational perspectives,” Adams said. “It’s optimized to meet the requirements of internet content providers like Google, AWS, Facebook, Microsoft and Apple.”

The top three vendors in the compact DCI sub segment are Ciena, Infinera and Cisco, who collectively account for three-quarters of the market.

Additional DCI highlights

  • Cost per port is the leading criterion among survey respondents for the selection of equipment for DCI applications.
  • 100G is the main currency for line-side DCI interfaces in 2018, declining in favor of 400G by 2021.
  • IHS Markit forecasts the total DCI market to grow at a 15 percent compound annual growth rate (CAGR) from 2017 to 2022, representing a higher rate of growth than the overall WDM market.

Optical Network Applications Service Provider Survey – 2018

This survey analyzes the trends and assesses the needs of service providers using emerging optical networking architectures. It covers data center interconnect, packet-optical equipment and software-defined networking for transport networks. For the survey, IHS Markit interviewed 22 service providers who have deployed packet-optical transport, optical DCI and/or transport SDNs or will do so in the future.

DCI, Packet-Optical & OTN Equipment Market Tracker

This biannual report provides worldwide and regional vendor market share, market size, forecasts through 2022, analysis and trends for data center interconnect equipment, packet-optical transport systems, and OTN transport and switching hardware.




3 thoughts on “IHS Markit: Data Center Interconnect (DCI) is Fastest-growing Application for Optical Networking

  1. MarketsandMarkets Research Pvt Ltd just published Market research report on Data Center Interconnect Market. Total 156 Pages Report contains 66 tables and 52 figures forecast The Data Center Interconnect (DCI) market was valued at USD 3.19 Billion in 2016 and is expected to reach USD 6.41 Billion by 2023, at a Compound Annual Growth Rate (CAGR) of 10.04% during the forecast period

    The study indicates that various international brands and new entrants form a competitive landscape in data center interconnect market. The key players of the market are indulged into the strategic partnerships, development of new product, acquisitions, and agreements to increase their revenues. The Data center Interconnect market has become competitive due to the presence of several established vendors.

    For instance, recently in March 21, 2017, the Juniper Networks an American multinational corporation had extended their data center interconnect services. These services incudes open cloud interconnect package that includes dense wavelength division multiplexing optical boards for its QFX10000 Layer 3 spine switch, BTI7800 optical transport switch families and software to manage those systems.

    Regionally, Asia-Pacific accounted to have a highest CAGR from countries such China, Japan and India among others. The reason is attributed to rapid adoption of cloud infrastructure and internet. Moreover, increasing R&D and increasing adoption of new technologies with respect to demand for datacenter to manage the high data generated is expected to drive the market in the region. However, North American region is expected to grow over the forecast period, 2017-2023. The reason is attributed to presence of new technologies and increasing investments in the region.

    The market is further bifurcated on the basis of type, application, end user and region. On the basis of type the market can be segmented into service, software and product. Out of these, service is expected to show the highest growth rate during the forecast period.

    Datacenter interconnect allows organizations to connect their datacenters using cloud services and also to support applications such as disaster recovery and business continuity. Various organizations are indulged in virtualizing their datacenter in need of efficiency and cost reduction. Also, moving to the cloud infrastructure for flexibility and agility which in turn expected to boost the market for DCI during the forecast period.

    For instance, Nokia is providing “Nokia professional services” that help organizations to achieve business success by reducing risk for DCI buildup as well as providing various services regarding deployment and implementation process of designing, consulting, integration, deployment, maintenance and consulting. Furthermore, company’s consulting services provides financial analysis, high level networks, certification as a service and architecture design.

    The factors contributing to the growth of the data center interconnect market are growing demand for disaster recovery, data backup, and business continuity; and rapid migration to cloud-based services. However, factors such as requirement of high initial investment are hindering the growth of the data center interconnect market.

    Read More about Data Center Interconnect Market by Type (Product, Software, Services), Application (Real-Time Disaster Recovery and Business Continuity, Workload (VM) and Data (Storage) Mobility), End User, and Geography – Global Forecast to 2023

    For more info Visit https://www.marketsandmarkets.com/Market-Reports/data-center-interconnect-market-40733195.html

  2. Update on new fiber links for data center interconnect:

    Jimmy Yu of Dell ‘Oro Group expects shipments of 400-gigabit equipment, first introduced in 2017, “to grow at an exponential rate with cumulative port shipments exceeding 10 million within three years.”

    Much of that equipment is aimed at data centers. Ciena is offering two families of systems. Its Extreme series, optimized for data rate and long-distance performance, includes the 800-gigabit model, which Xenos says can transport the full rate over 100 to 200 kilometers for data center connections, and can be adjusted to carry 600 gigabits for a thousand kilometers, or 400 gigabits for even longer hauls. It uses cutting-edge technology, including seven-nanometer CMOS digital signal processing chips and high-bandwidth electro-optics. A Nano series optimized for the small footprint and low power sought for use inside data centers can carry 100 to 400 gigabits, depending on the distance.

    Each system is a box full of optics and electronics that serves as an interface between one part of a data center and one wavelength on a fiber-optic cable.


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