Dell’Oro: Optical Transport Systems market +15% year-over-year in 3Q2025 driven by Cloud Service Providers
Dell’Oro Group recently published its 3Q25 Optical Transport report, highlighting continued strength in the market as demand accelerates across customer segments and technology areas. Below is a summary of the key findings from this latest research.
The Optical Transport Systems market increased by 15% year-over-year (Y/Y) in 3Q2025, driven by robust demand across all major customer groups and technology segments. The most significant growth was seen in Cloud Service Providers (CSPs) which grew +58% Y/Y and the DWDM Long Haul segment which grew +24% Y/Y. Direct sales for data center interconnect (DCI) continued to be the driving application for optical transport equipment sales, growing 34% Y/Y. Non-DCI also performed well, rising 7% Y/Y, driven by increased spending by communication service providers (CSPs).
In the first nine months of 2025, two vendors—Ciena and Nokia—gained more than one percentage point of market share. Other vendors that gained some market share included 1Finity, Adtran, Cisco, and Smartoptics. Note that Nokia acquired Infinera -a fiber optic equipment company on February 28, 2025.
Image Source: Jimmy Yu, Dell’Oro Group
The Dell’Oro Group Optical Transport Quarterly Report offers complete, in-depth coverage of the market with tables covering manufacturers’ revenue, average selling prices, and unit shipments (by speed up to 1.6 Tbps). The report tracks DWDM long haul, WDM metro, multiservice multiplexers (SONET/SDH), data center interconnect (metro and long haul), disaggregated WDM systems, and IPoDWDM ZR/ZR+ Optics. To purchase this report, please contact us at [email protected].
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Backgrounder:
- Optical Transceivers: Convert electrical signals into optical signals for transmission over fibers, and vice versa, at the endpoints of a link.
- Wavelength Division Multiplexers (WDM/DWDM): Devices that combine multiple optical signals (each on a different wavelength) into a single fiber for transmission, and separate them at the receiving end, maximizing fiber capacity.
- Optical Add/Drop Multiplexers (OADMs): Allow specific wavelengths (channels) to be added or removed from a fiber link at intermediate points in the network without interrupting the other channels.
- Optical Cross-Connects (OXCs) / Optical Switches: Used to route optical signals from one incoming fiber to a different outgoing fiber in the optical domain, often used in core networks.
- Regenerators / Optical Amplifiers (EDFAs): Used to amplify or regenerate optical signals over long distances to maintain signal strength and quality.
- OTN Terminal Equipment / Muxponders & Transponders: These devices package client signals (like Ethernet, Fibre Channel, or even SONET/SDH signals) into the standard OTN frame format (ITU G.709) for efficient transport.
- SONET/SDH: These are legacy, connection-oriented, circuit-switched technologies originally designed for carrying voice traffic in North America (SONET) and globally (SDH). They operate at the physical layer (Layer 1) and use Time Division Multiplexing (TDM).
- Usage: They are still widely deployed in existing network infrastructure, especially where high reliability and stringent latency requirements for legacy TDM services are necessary.
- OTN: OTN (ITU-T G.709 standard) is the modern successor, designed to combine the management and protection capabilities of SONET/SDH with the bandwidth efficiency of WDM.
- Usage: OTN has largely replaced SONET/SDH in new core and metro networks due to its ability to transparently carry multiple types of traffic (Ethernet, IP, Fibre Channel, and SONET/SDH frames) over a single, high-capacity infrastructure. It offers enhanced performance monitoring, Forward Error Correction (FEC) for longer reach, and greater scalability.
- Huawei has consistently maintained a leading position in the global optical networking market.
- Ciena is a major leader, particularly in North America (holding nearly 50% share in the U.S. market) and among cloud providers, benefiting from strong demand for its WaveLogic 6e and 400ZR/ZR+ solutions.
- Nokia has significantly strengthened its position, becoming the second-largest optical networking vendor globally (with approximately 20% market share) following its acquisition of Infinera in February 2025. The combined company saw substantial growth in revenue from cloud customers.
- Cisco saw a 31% increase in revenue from cloud operators in Q2 2025, a key driver of market growth.
- ZTE and FiberHome are also among the top six, often noted for their competitive solutions in global and emerging markets.
- Excluding sales into China, the leading vendors are Ciena, Huawei, Nokia, Infinera (now part of Nokia), and Fujitsu, accounting for around 80% of that specific market segment.
References:
Optical Transport Market Surges 15% in 3Q25, According to Dell’Oro Group
Dell’Oro: Optical Transport market to hit $17B by 2027; Lumen Technologies 400G wavelength market
LightCounting: Q1 2024 Optical Network Equipment market split between telecoms (-) and hyperscalers (+)
Highlights of LightCounting’s December 2023 Quarterly Market Update on Optical Networking
Dell’Oro: Optical Transport Market Down 2% in 1st 9 Months of 2021
Dell’Oro: Optical Transport Equipment Market Stagnant in 1Q 2021; Jimmy Yu’s Take
Dell’ Oro: Huawei still top telecom equipment supplier; optical transport market +1% in 2020
