Revenues for data center interconnection (ICD) equipment have surpassed $3 billion globally on an annualized basis, with internet content providers and cloud providers emerging as a significant new market segment.
“Spending on ICD is having a significant impact on the market, particularly in North America, where many internet and cloud providers have large networks connecting hyperscale data centers,” said Ian Redpath, principal analyst at Ovum. “Our research on capital expenditure indicates that internet content providers (ICPs), whose core business is the creation, storage, and distribution of digital information, and carrier-independent providers are spending heavily on data center infrastructure, including DCI optical transmission. Orders for 100G equipment, in particular, are growing strongly in the internet content and carrier-independent markets.”
According to Redpath, several vendors are vying for market leadership in the North American DCI market, including Adva Optical Networking, Alcatel-Lucent, BTI Systems, Ciena, Cisco, and Infinera. While Alcatel-Lucent and Ciena have traditionally been strong players in the North American Internet content provider and independent operator (CN/ICP) market, preliminary data for Q3 2014 indicates that Infinera is the fastest-growing company in this sector. Other companies experiencing strong growth in the region include Adva Optical Networking and BTI Systems. Ovum initiated a DCI spending study in September 2014, with completion expected in April 2015.
"China is the second largest market for the ON equipment sector after North America and is projected to grow by 9% in 2014 as Chinese operators have invested in LTE and fixed broadband deployments. Over the next five years, Ovum forecasts a compound annual growth rate (CAGR) of 4% for China.
The Rest of Asia and Oceania (RoAO) region is projected to grow at a CAGR of 4.7% by 2019. The RoAO region is rapidly modernizing its network infrastructure, and optical networks are being upgraded to support wireless growth. Outstanding spending in Europe and MEA will be low this year but is expected to resume growth in 2015, while North America is projected to grow at a CAGR of 3.2% by 2019, largely driven by growth in DCI applications. North was the largest DCI region in 2015 due, in part, to the rapid emergence of CN/ICP as a major segment, particularly for 100G.
