Record spending in the cloud and colo market continued in the third quarter and it is now forecast to top US$1.4 billion worldwide for the year 2018. This represents almost a 50% spending increase over 2017, according to the most recent Optical Customer Markets Report issued by market research firm Cignal AI. With double-digit year-over-year growth in North America and EMEA and triple-digit growth in APAC in the third quarter, Cignal AI says cloud and colo operators continue to be the fastest growing market in optical networking.
“The slowdown in cloud and colo spending during 2017 ended with a return to record growth in 2018,” said Scott Wilkinson, lead analyst for optical hardware at Cignal AI. “While incumbent operator spending is still dominant, especially in Asia, cloud and colo spending growth is becoming more influential on the market.”
The report also finds that Ciena led equipment vendor market share for cloud and colo with over 40% share in the third quarter and over 30% share for the last 12 months combined. Huawei and Cisco tied for second place in the third quarter followed closely by a combined Infinera/Coriant. It says that despite incumbent spending growing at less than 2% year over year worldwide, incumbent spending in APAC grew 10% and represented over 35% of the total optical market in the third quarter.
Incumbent spending growth in APAC is expected to decelerate in 2019 as double-digit growth cannot continue indefinitely for such a large market. Incumbent spending in North America is expected to continue to decline as capital spending is focused on mobility and switched backhaul deployments. Cable MSO optical spending continued to grow at a moderate pace into the third quarter, led by double-digit growth in North America to support fibre deep architectures.
The report includes revenue-based market size for all end customer markets across all regions, with market share for the cloud and colo segment broken out on a worldwide basis. Vendors examined include Adtran, ADVA, Ciena, Cisco, Coriant, ECI, Ekinops, Fibrehome, Fujitsu Networks, Huawei, Infinera, Juniper Networks, NEC, Nokia, Padtec, TE Conn, Tejas, Xtera and ZTE.
For more information, visit www.cignal.ai