Interest in leveraging IPoDWDM platforms with ZR+ optics, driven by the scale of data center build-outs for AI training, will be a key growth driver in a market on track to see significant growth.
Dell’Oro Group’s latest IPoDWDM and Disaggregated WDM report revealed that IPoDWDM systems demand is expected to grow at an average annual rate of 16 percent, reaching $4.4 billion by 2030.
The research group also found that shipments of ZR+ optical pluggable modules for routers and switches are expected to increase in 2026 as hyperscalers scale across data centers to build larger AI factories.
Following the recovery in the second quarter of 2024, Dell’Oro forecasts that the IPoDWDM market will grow nearly 40 percent in 2025. ZR optics is the dominant pluggable used in IPoDWDM to date.
While DCI is a key driver, traditional service providers' interest in IPoDWDM is rising.
Dell’Oro said that “over 25 percent of IPoDWDM system revenue is expected to be from non-DCI applications by 2030 as more communication service providers adopt the technology in their networks.”
800ZR+ rising
The 800 ZR+ is set for greater growth in the coming year.
Driven by scale across DCI, Dell’Oro said 800 ZR+ optical module shipments will drive a “sharp increase” in 2026. Also, the research firm noted that over one-third of IPoDWDM ZR/ZR+ revenue is expected to be from 800 ZR/ZR+ module shipments in the year.
Scale-across DCI is expected to change the market dynamics, driving a sharp increase in 800 ZR+ optical module shipments in 2026. Based on projections for volume and average sales price, over one-third of IPoDWDM ZR/ZR+ revenue is expected to be from 800 ZR/ZR+ module shipments in the year.
“The interest level in ZR+ optics has grown by ten times since just a year ago,” said Jimmy Yu, Vice President at Dell’Oro Group. “In the original inception of coherent ZR pluggable modules, the dominant use case was for interconnecting data centers less than 80 kilometers apart. The ZR+ versions were developed as an afterthought, with no clear need. Since then, with the sudden rise in power-hungry AI data centers, the need has shifted to moving data centers farther out, with much more fiber capacity between them to handle the intensive AI workloads.”
He added that “the need to scale across data centers to build up AI training centers is sharply pivoting demand for IPoDWDM systems with large amounts of ZR+ optics.”
Marvell, Cisco and Ciena dominate
As of the third quarter, Marvell, Cisco, and Ciena were the three dominant players in the ZR/ZR+ optical pluggable modules market by shipment volume.
Driven by the AI boom and hyperscaler demand to scale data centers, Marvell's ZR+ pluggable optics are experiencing ongoing growth. The company expects shipments to ramp in 2026 as they enable long-distance, high-bandwidth connections (800G/1.6T) directly into switches.
Interoperability is a key focus for Marvell. In September 20024, Marvell Technology, Lumentum Holdings Inc., and Coherent Corp. conducted an interoperability demonstration of 800G ZR/ZR+ optical modules over transmission links up to 500km.
Cisco is also seeing growing interest in its ZR+ platforms. The company’s 800G ZR+ coherent optics have been tested in live network field trials by major carriers such as Arelion, demonstrating significant operational expenditure (OpEx) savings (up to 95%) and long-distance capacity increases (e.g., 1,069 km).
Like Marvell and Cisco, Ciena also expects interconnects to play a meaningful role in scale-up, scale-out, and scale-across networks.
Ciena reported that in fiscal year 2025, it surpassed its target of more than doubling FY24 pluggable revenue, reaching $168 million.
“In the quarter, our WaveLogic 6 Nano 800-gig pluggables were shipped for initial revenue,” said Gary Smith, CEO of Ciena. “And since the end of the quarter, we have shipped 800 ZR plugs to three additional cloud providers for testing and certification.”
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