Year-over-year optical DataCentre Interconnect (DCI) hardware revenue grew by 26% globally, reaching $2.6 billion in 2017. So says the latest research from IHS Markit.
Looking ahead, by 2022 IHS Markit predicts this market will exceed $5 billion in annual sales, and represent close to 30% of all Wavelength Division Multiplexing (WDM) equipment spending. “The optical DCI equipment market experienced very strong momentum in 2017,” states Heidi Adams, Senior Research Director, IP and optical networks, IHS Markit. “Moving forward we are forecasting continuing growth, as service providers, Internet Content Providers (ICPs) and enterprises make additional investments to connect expanding and proliferating datacentre facilities.”
Within the optical DCI market, the compact DCI transport equipment sub-segment grew briskly by over 200% in 2017, reaching $483 million in revenue. The analyst firm reckons this segment will continue to grow over time, as digital transformation continues at enterprises worldwide, and as more and more content – including enterprise applications and video – is hosted and delivered via the cloud.
Compact DCI equipment is also notable as it represents a broader industry trend toward optical equipment disaggregation – where different functions in the optical network can be addressed by open hardware platforms and linked together through Software-Defined Networking (SDN) controllers and applications. “As disaggregated equipment configurations get proven out in DCI applications, we can see usage expanding to address other areas in metro optical and enterprise applications,” adds Adams.
Total Optical Transport Network (OTN) hardware sales totalled $11.3 billion in 2017, up 4% YoY. Although OTN switching continues to grow as a percentage of total optical equipment sales, OTN transport has seen a significant decline.
The emergence of optical DCI, and the influence of the web-scale ICPs, account for a significant part of this decline. While traditional carriers have adopted OTN, the ICPs have standardised on Ethernet as the preferred technology providing sub-wavelength aggregation and switching. “With no legacy TDM traffic or connection-oriented services to support, the business case for introducing OTN services, OAM and/or OTN switching infrastructure is less apparent,” concludes Adams. “As a result, a new class of ‘OTN-free’ WDM equipment, optimised for the requirements of web-scale and datacentre operators, has emerged.”