Market research consultancy Ovum predicts good things in the long term for the optical network hardware market, thanks to increasing bandwidth demands from data centers. Sales of fiber-optic network systems will grow at a 5% compound annual growth rate through 2017, to reach $20 billion, according to Ovum's new "ON Forecast Report: 2012-17."
"The new bandwidth driver is data centers. Large-scale data centers continue to be built out – both the multi-tenant, carrier-neutral variety and private data centers," says Ian Redpath, principal analyst in Ovum's Network Infrastructure practice. "The data centers are being placed in brand new locations, creating brand new optical networking demands. For example, the new Facebook data center 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."
Latin America will offer the most opportunity, Ovum believes, because of modernization efforts to improve regional connectivity to support mobile and broadband access network deployments. Meanwhile, North American demand for optical network systems will show what it terms "solid growth" thanks to Tier 1 deployments of 100-Gbps technology.
The Asia-Pacific market will continue to expand as well, although not at the same explosive rate as the past five years. "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," predicts Redpath.
And Ovum even expects good news from the EMEA market despite its current macroeconomic problems, as deployments will continue in Russia, the U.K., Eastern Europe, and Africa. For example, Russian network operators want to supply pan-Asian capacity connecting the Far East to Europe overland. The southeast U.K. is another hotspot, with over 150 data centers outside of central London that require high-bandwidth interconnection.
"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," concludes Redpath.