Ovum says Data Center Interconnect a booming market for suppliers

London, 21 April, 2015 – Revenues for data center interconnect (DCI) continue to grow at a rapid pace according to a recently completed market study* by Ovum, a global analyst firm. 2014 revenues of US$2.5bn grew more than 16% from 2013. Nearly one-half of all DCI spending in 2014 was from communications service providers (CSPs) but the Internet content provider (ICP) segment grew 64% on the year.

According to the study, the DCI market is particularly strong in North America, where ICPs and carrier-neutral providers (CNPs) account for the majority of DCI spending. Here are some of the key findings:

  • Enterprise IT evolution to cloud and the explosive growth of video is driving strong growth in data center builds and fundamentally changing how networks are constructed.
  • The ongoing surge in DC build-outs has made DCI the fastest growing application for optical networking (ON) equipment. DCI revenues grew 16.2% in 2014, surpassing US$2.5bn.
  • Most data center operators lease managed DCI services from CSPs, but a growing number of ICPs (e.g. Google, Facebook) and enterprises are securing fiber assets and building their own interconnect networks, increasing the opportunity for optical networking (ON) vendors.
  • Growth in the number of data centers clustered in metro and campus environments is increasing the requirement for high-capacity, low-cost optical networking gear that is fundamentally different than traditional metro ON equipment.
  • Ciena is the global market share leader for the total DCI market. By segment, Ciena also leads the Government/R&E and Enterprise end-user segments. Alcatel-Lucent leads the CSP market, while Infinera leads the ICP/CNP combined segment.
  • The global DCI market is projected to grow at 10.5% CAGR in the 2014–19 period, surpassing US$4.2bn in 2019. DCI growth is strongest in the ICP segment, which is slated to grow at a 12% CAGR for 2014–19.

Ron Kline, Principal Analyst, Intelligent Networks at Ovum, said “2015 is shaping up to be a very exciting year as metro-optimized 100G and adaptable-rate flex-spectrum 200G/400G capabilities enter the DCI market. We see tremendous opportunity for specialists such as Adva Optical Networking, BTI Systems, and Infinera to challenge their much bigger rivals for a larger share of this booming market.”