Optical DCI contributed over $1B in 2015 with total Optical infrastructure finishing the year at $13.3 billion
ACG Research has released its 2H-2015 worldwide Optical infrastructure and worldwide Optical Data Center Interconnect (DCI) forecast. The forecast period runs through 2020. The worldwide Optical infrastructure market is predicted to grow from $13.2 billion in 2015 to $17.8 billion by 2020. Purchases of Optical DCI equipment are expected to grow from $1.03 billion in 2015 to $4.3 billion in 2020. ACG Research predicts growth in all geographic regions including EMEA where total optical networking revenues have been flat to down over the past several years.
Optical infrastructure demonstrated its usual seasonality throughout 2015 with Q2 and Q4 being the strongest calendar quarters. After a down Q3, Q4-2015 saw growth in both Metro (POTS + Metro DWDM) and Long Haul optical segments at robust 17.5% and 19.5% q-q rates, respectively. For the year, Metro optical produced 5.2% growth while Long Haul delivered 7.9% for a combined High Speed Optical (HSO) annual growth of 6.4%. When combined with the 14.3% decline in legacy optical infrastructure spending, total optical infrastructure managed positive 1.2% growth in 2015 to finish at $13.3B. Looking forward, ACG Research anticipates 6.6% Long Haul optical CAGR and more than 10% Metro optical CAGR over the forecast period.
Optical DCI equipment revenue exceeded $300m for the first time in 4Q-2015 to contribute more than $1B to the Optical infrastructure market for the year with an annual growth rate in excess of 40%. Optical DCI revenue is projected to grow at a 33.1% CAGR from 2015 to 2020. The fundamental underpinnings of DCI growth remain strong: annual data center bandwidth growth, increasing service requirements for data center interconnectivity and increases in the total number of data centers worldwide. Over the forecast period, ACG predicts the Metro Optical DCI growth rate will exceed Long Haul Optical DCI and SFF Optical DCI appliances will grow at a faster rate than multi-slot Optical DCI chassis-based solutions, although multi-slot chassis solutions will remain slightly dominant throughout the forecast period. A series of publicly announced new entrants to the SFF Optical DCI appliance market including Ciena Waveserver, Fujitsu 1Fininity, Adva CloundConnect, Cisco NCS 1002, Coriant Groove G30 will join the market leading Infinera CloudXpress in 2016 and keep downward pressure on prices.
Additional growth drivers beyond DCI for Optical infrastructure over the forecast: accelerating 100G/200G+ coherent optical upgrades, mobile front-haul, 5G mobile backhaul and bandwidth expansions, multi-layer encryption/security and transport/multi-layer SDN.