Optical transport systems market to approach $18 billion in next five years: Dell’Oro

Despite the near-term economic dampening effects of the COVID-19 pandemic, analysts at Dell’Oro Group expect the next five years to be largely happy ones for optical transport systems vendors. The market research firm states in its newly released Optical Transport 5-Year Forecast Report that annual optical systems sales revenues will approach $18 billion over the next five years, up from $15 billion in 2019. Purchases of DWDM technology, including for 800G capabilities, will lead the way, according to Dell’Oro.

While economic recession generally causes the optical transport systems market to contract, Dell’Oro believes the optical transport space will prove resistant to such shrinkage during the current pandemic. Increases in bandwidth demand due to working-from-home and remote-learning requirements should provide market momentum, the market research firm expects. Near-term challenges related to supply, distribution, and installation must be overcome for this relatively rosy view to prove correct, Dell’Oro points out.

A desire for 800-Gbps capabilities will spur DWDM technology spending, according to the report. Dell’Oro predicts 30% of DWDM shipments will be 800G capable by 2024. However, not all of these capabilities will be used fully right away; Dell’Oro says that more than half of 800G line cards sold in 2024 will operate at 400 Gbps. Looking forward, the market research firm expects 1.2 Tbps to be the next wavelength transmission rate. Such technology should reach the market in 2023 or 2024 – more likely the latter, Dell’Oro believes.

Disaggregated WDM transponders also should prove a popular technology, with unit sales growing at a double-digit percentage rate annually during the forecast period.

However, not every breeze over the next five years will be a tailwind, Dell’Oro points out. The arrival of 400ZR optical modules will promote IP over DWDM (IPoDWDM) architectures, wherein network operators will plug optical modules directly into router ports, bypassing the need for optical line systems. This trend also leads Dell’Oro analysts to predict the hot data center interconnect platform space will finally show signs of cooling within the next five years.

Dell’Oro’s Optical Transport 5-Year Forecast Report provides an overview of the optical transport market and includes tables covering manufacturers’ revenue, average selling prices, unit shipments, and wavelength shipments (by speed up to 1.2 Tbps). The report tracks DWDM long-haul, WDM metro, multiservice multiplexers (SONET/SDH), optical switches, optical packet platforms, data center interconnect (metro and long haul), and disaggregated WDM technology.

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