Revenues for data center interconnect (DCI) market rose more than 16 percent in 2014 to $2.5 billion, said Ovum.
Nearly one-half of all DCI spending in 2014 was from communications service providers (CSPs) but the Internet content provider (ICP) segment grew 64 percent on the year.
The DCI market is strong in North America, where ICPs and carrier-neutral providers (CNPs) account for the majority of DCI spending.
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 surge in DC build-outs has made DCI the fastest growing application for optical networking (ON) equipment.
Most data center operators lease managed DCI services from CSPs, but a number of ICPs such as Google and 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 percent CAGR in the 2014–19 period, surpassing $4.2 billion in 2019. DCI growth is strongest in the ICP segment, which is slated to grow at a 12 percent CAGR for 2014–19.
“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,” said Ron Kline, principal analyst, Intelligent Networks at Ovum.
Ovum expects opportunity for specialists such as Adva Optical Networking, BTI Systems, and Infinera to challenge their much bigger rivals for a larger share of the data center interconnect market.