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Huge New Market Ahead for Optical Data Center Interconnection

December 15, 2015

Fiber is on the rise, whether to the home or in the data center; and that means plenty of new opportunity in this burgeoning market. Word from ACG Research says that the market is set for a huge spike over the next five years, going from $1.1 billion in 2014 to $4.7 billion in 2019.

That's a growth pattern that represents a compound annual growth rate (CAGR) of 44.9 percent over the next five years, and in turn is being driven by a variety of factors. ACG Research's practice lead for intelligent transport networking, Tim Doiron, notes that the big demand for optical data center interconnect (DCI) technology has a few drivers connected to it. The growing move to data centers as a means to provide services is a big one, as using the cloud for a service provider often makes deployment simpler and new services emerge faster.

With an increasing number of functions becoming automated or virtualized, Doiron continues, that means the data center will need plenty of network capacity. Such networks will need “capacity, resiliency and versatility,” as Doiron puts it, making fiber attractive. ACG considers several subclasses of product sales, including small form factor (SFF) operations and large-scale operations involving multi-slot chassis. ACG also looks at both metro applications and long-haul applications in its numbers.

Metro DCI platforms are expected to come out ahead over long-haul, though both will see growth in that time frame. Long-haul applications have an expected CAGR of 24.6 percent, but metro's CAGR rises to 51.5 percent. The traditional mature market for nearly everything, the Americas, will be the biggest growth point for DCI through 2019, though there will be plenty of growth in other regions. The Europe, Middle East and Africa (EMEA) region and Asia-Pacific (APAC) have seen substantial growth as well, but each represents only around half of the Americas' market footprint.

It's not surprising to see fiber growing like this. While fiber can be expensive in some deployments—particularly those covering widely-dispersed geographic areas—we know that fiber delivers some amazing throughput and some very big data rates. Google Fiber may be the biggest point on that front, but it's far from alone. We've seen municipalities turning to fiber as a means to provide new, high-end Internet access for residents, and companies are starting to turn to fiber more as well. Just back in May, we found that Verizon was planning an all-fiber rollout, after it made the discovery that fiber was cheaper than copper.

Combine reduced expenses with higher power and it's not surprising to see data centers meeting vastly increased throughput needs with fiber. While we may not achieve the numbers ACG projects, there's still likely to be a lot of growth here. 

Edited by Maurice Nagle

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