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Data centre growth to drive optical network market

Optical Networking equipment market to reach $20bn by 2017 says Ovum

The optical network equipment market is set to grow by 5% CAGR through to 2017, says Ovum.
The optical network equipment market is set to grow by 5% CAGR through to 2017, says Ovum.

Growth in data centres will drive the market for optical networking (ON) equipment to reach $20 billion per year by 2017, according to Ovum.

The analyst company says that global demand for data centres and data centre connectivity will drive the ON market with compound annual growth rate of 5%.

“The new bandwidth driver is data centres. Large-scale data centres continue to be built out –both the multi-tenant, carrier-neutral variety and private data centres,” said Ian Redpath, principal analyst in Ovum’s Network Infrastructure practice. “The data centres are being placed in brand new locations, creating brand new optical networking demands. For example, the new Facebook data centre at Lulea, Sweden, near the Arctic Circle, will require terabits of bandwidth. These new demands are not unique to Lapland – they are emblematic of a trend unfolding in multiple European and North American locations.”

The fastest growing region will be Latin America, according to Ovum, as growing operator incomes facilitate inter- and intra-continental network upgrades. The EMEA region will expand despite economic conditions, particularly as Russian network operators look to supply pan-Asian capacity interconnecting the Far East to Europe overland. US markets will be driven by the switch to 100G technology, while Asia-Pacific will see some slowdown, although markets such as China will be driven by the need to upgrade high-speed fixed broadband and next-generation mobile networks.

“In China, the optical network market has trebled in size over the past 5 years and continues to grow. Much of the core backbone was built in support of early generations of mobile technology, but there is still a wave of high-speed fixed broadband and next-generation mobile to come,” Redpath commented. “All told, the global optical network market is at a very interesting point in its evolution. New demands are arising just as the industry’s latest technology offering is coming to fruition.”