Cignal AI: Record Spending on Cloud Operator Optical Networks Drives Growth in 2018

by Andrew Schmitt and Scott Wilkinson of Cignal AI

Cloud operator spending on optical hardware grew almost 50 percent year-over-year to reach well over over $1 billion in 2018, according to the most recent (4Q18) Optical Customer Markets Report from research firm Cignal AI.

“Cloud network operators such as Google and Microsoft were the only customers in the optical market to exhibit significant spending growth last year” said Scott Wilkinson, Optical Hardware Lead Analyst for Cignal AI. “While still the largest segment overall, incumbent spending on optical hardware was down last year, particularly in North America.”

Optical Ahrdware SPending Trends by Customer Market 4Q18 North America
The Cignal AI Optical Customer Markets Report is issued quarterly and quantifies optical equipment sales to five key customer markets: incumbent, cloud and colo, wholesale, cable MSO, and enterprise and government. Findings from the current report – including market size, forecasts by regions and optical hardware vendor market share – will be examined via a webinar on Tuesday, April 23 at 11 a.m. EDT, which is open to all report clients.

Key findings in 4Q18 Optical Customer Markets Report:

  • Cloud operators remain the fastest-growing segment – North American cloud operators spent nearly as much on optical hardware as incumbents such as AT&T and Verizon in Q4.  New builds drove growth in EMEA, making cloud and colo the fastest-growing worldwide customer segment in 2018.
  • Ciena extends market lead among cloud operators –Ciena supplied over a third of the global market and doubled its lead over its nearest competitor. Others in the top five include Cisco, Huawei, Nokia and Infinera.
  • Incumbent spending growth will remain in low single digits through 2023 – While incumbents still purchase most optical hardware, their spending is static when compared with new network operators. Updated forecasts indicate a decline ahead in North American incumbent spending.
  • Cable/MSO and Wholesale Operators Decelerate Spending – Spending growth by cable/MSO operators was weak and market consolidation resulted in slowing wholesale optical network deployments.

The 4Q18 Optical Customer Market Report includes current quarter and full year 2018 optical sales for all tracked vertical markets. The report also includes optical equipment vendor market share for sales to cloud and colo operators, as well as updated customer market forecasts through 2023.

About the Optical Customer Markets Report

The Cignal AI Optical Customer Markets Report tracks optical equipment spending by end customer market type. It provides forecasts based on expected spending trends by regional basis. The report includes revenue-based market size for all end customer markets across all regions, with market share for sales to the cloud and colo segment broken out on a worldwide basis.

Vendors examined include Adtran, ADVA, Ciena, Cisco, Cyan, ECI, Ekinops, Fiberhome, Fujitsu Networks, Huawei, Infinera, Juniper Networks, Mitsubishi Electric, MRV, NEC, Nokia, Padtec, TE Conn, Tejas Networks, Transmode, Xtera and ZTE.

Quarterly report deliverables include an Excel file with complete data set, PowerPoint summary of highlights and Cignal AI Active Insight market event news briefs. Full report details, as well as free articles and presentations, are available on the Cignal AI website.

About Cignal AI

Cignal AI provides active and insightful market research for the networking component and equipment market and the market’s end customers. Our work blends expertise from a variety of disciplines to create a uniquely informed perspective on the evolution of networking communications.

Contact Cignal AI/Purchase Report

Sales: sales@cignal.ai
Web: Contact us
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2 thoughts on “Cignal AI: Record Spending on Cloud Operator Optical Networks Drives Growth in 2018

  1. Equinix, Inc. says it has improved the connectivity of its Platform Equinix. The Equinix Cloud Exchange Fabric (ECX Fabric) now offers connections between all 37 ECX Fabric markets, located in five continents. Customer also can use the ECX Fabric as a primary connection option between Equinix International Business Exchange (IBX) data centers or as a more complete complement to their existing MPLS or Ethernet networks.

    The expanded connectivity enables Equinix customers to connect to clouds in other regions as well as establish on-demand connections between the Americas, Europe, and Asia-Pacific. Cloud connection options include Amazon Web Services, Microsoft Azure, Oracle Cloud Infrastructure, and Google Cloud on Platform Equinix. The 37 metro markets in which ECX Fabric is available include Amsterdam, Atlanta, Boston, Chicago, Culpeper, Dallas, Denver, Dublin, Dusseldorf, Frankfurt, Geneva, Helsinki, Hong Kong, Houston, London, Los Angeles, Madrid, Manchester, Melbourne, Miami, Milan, Munich, New York, Osaka, Paris, Perth, São Paulo, Seattle, Silicon Valley, Singapore, Stockholm, Sydney, Tokyo, Toronto, Warsaw, Washington, DC, and Zurich. Equinix asserts that more than 1,400 customers currently use the ECX Fabric.

    “The imperative of digital transformation is driving enterprises to adopt multicloud strategies, which entail complex management of multi-cloud environments. Indeed, as their applications become increasingly distributed, residing not only in on-premises data centers but also in public clouds, these organizations are finding that the parameters of what constitutes a data center network must be redefined,” commented Brad Casemore, vice president, data center networking at market research and analysis firm IDC via an Equinix press release.

    “In this context, IDC finds that interconnection architectures at the digital edge are becoming integral elements of a comprehensive network for the cloud era. The geographic expansion of ECX Fabric will play a valuable role in helping companies accelerate their digital transformation initiatives through having the ability to instantly deploy flexible, interconnection-oriented network architectures worldwide.”

    https://www.lightwaveonline.com/articles/2019/04/equinix-upgrades-ecx-fabric-to-link-37-metro-markets.html

  2. Cloud Drives 2018 Spending on Data Center Hardware & Software to $150 billion

    New data from Synergy Research Group shows that worldwide spend on data center hardware and software grew by 17% in 2018.

    The 2018 market leader in private cloud was Dell EMC, followed by Microsoft, HPE and Cisco. The same four vendors led in the non-cloud data center market, though with a different ranking.

    “Cloud service revenues continue to grow by almost 50% per year, enterprise SaaS revenues are growing by 30%, search/social networking revenues are growing by almost 25%, and e-commerce revenues are growing by over 30%, all of which are helping to drive big increases in spending on public cloud infrastructure,” said John Dinsdale, a Chief Analyst at Synergy Research Group. “We are also now seeing some reasonably strong growth in enterprise data center infrastructure spending, with the main catalysts being more complex workloads, hybrid cloud requirements, increased server functionality and higher component costs. We are not seeing much unit volume growth in enterprise, but vendors are benefitting from substantially higher ASPs.”

    https://www.srgresearch.com/articles/cloud-drives-2018-spending-data-center-hardware-software-150-billion

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