Data Center Interconnect Market Size, Share & Trends Analysis Report By End-use (CSPs, ICPs/CNPs, Government/R&E), By Type (Hardware, Software, Services), By Region, And Segment Forecasts, 2022 - 2030

Report Overview

The global data center interconnects market size was valued at USD 7.52 billion in 2021 and is expected to grow at a compound annual growth rate (CAGR) of 12.6% from 2022 to 2030. The emphasis by the data center providers on latency, throughput, streamlined operations, intelligence, security, and maintenance is expected to drive the growth of the industry during the forecast period. The growing demand for higher bandwidth in line with the continued advances in the latest technologies, such as the Internet of Things (IoT), has triggered the need for linking data centers reliably and cost-effectively, thereby driving the adoption of Data Center Interconnect (DCI) solutions.

DCI systems are easy to configure as they incorporate common management interfaces and industry-standard APIs, and can hence help in driving automation and reducing manual errors while shortening maintenance windows, which also bodes well for the industry growth. The demand for Over-The-Top (OTT) services increased during the COVID-19 pandemic, and organizations opted for cloud computing and pure colocation to support remote working, thereby driving the demand for DCI solutions. However, the industry also had to confront a looming shortage of DCI hardware as production activities at various manufacturing facilities across Taiwan, China, Mexico, Malaysia, and the U.S. were suspended temporarily.

Moreover, these production sites also continued to confront supply chain disruptions. Nevertheless, the industry eventually witnessed overall growth. The continued rollout of 5G networks across various parts of the world is expected to play a vital role in driving the industry's growth. 5G technology is facilitating the easy transfer, transmission, and storage of data collected from various IoT devices. As a result, the demand for data centers with higher capacity, more accurate network synchronization, and more flexible telecommunications services is also growing. DCI solutions would typically play a niche role in interconnecting high-capacity data centers.

Type Insights

The hardware segment dominated the industry in 2021 and accounted for the largest share of more than 56.4% of the overall revenue. The rising volumes of big data are prompting cloud service providers to demand greater storage facilities. The growing demand for switches, routers, cables, servers, storage space, and server racks is particularly driving the growth of the DCI industry. The software segment is anticipated to register the fastest growth rate during the forecast period.

DCI software solutions help network operators ensure an appropriate combination of DCI-optimized packet, security, and virtualization technologies to link data centers, thereby contributing to the growth of the segment. Furthermore, the DCI software solutions help in balancing and sharing resources when network traffic, and subsequently, the demand for adequate bandwidth increases. Various features associated with the DCI software can help network operators in adjusting the bandwidth in real time according to the changing requirements.

End-use Insights

The Communications Service Providers (CSPs) end-use segment dominated the industry in 2021 and accounted for the maximum share of 32.5% of the overall revenue. CSPs are investing aggressively to cater to the growing demand for an increased capacity for facilitating managed services. Furthermore, CSPs are focusing on managed DCI and cloud interconnect services and are also leveraging their data center assets and central office resources to offer virtual private cloud services.

The Internet Content Providers and Carrier-Neutral Providers (ICPs/CNPs) segment is anticipated to register the fastest growth rate during the forecast period. Some of the largest ICPs, including Facebook (Meta), Google, and Microsoft, are generating very large volumes of internet traffic. Hence, these ICPs are also opting to build fiber networks to interconnect their data centers. Given that flexibility is of paramount importance for carrier-neutral colocation facilities, several carrier-neutral colocation facilities are investing aggressively in DCI technology.

Regional Insights

North America dominated the global industry in 2021 and accounted for the maximum share of more than 38.4% of the overall revenue. North America is home to several leading telecommunications companies, well-established suppliers, and incumbents of various end-use industries and industry verticals. All these entities are aggressively adopting the latest technologies to improve corporate productivity and work efficiency. A well-developed ICT infrastructure and the presence of large data center clusters in the U.S., such as New York, Los Angeles, Chicago, and Washington DC, also bode well for the growth of the regional market.

Asia Pacific is expected to emerge as the fastest-growing region during the forecast period. Implementation of optical transportation networking equipment in data centers and the continued rollout of long-haul and metro networks are expected to contribute to the growth of the APAC regional market. Moreover, China's enterprise communications landscape is evolving rapidly in line with the rising demand for cloud computing and the advances in digital technologies, thereby necessitating more adaptable, scalable, and efficient DCI services.

Key Companies & Market Share Insights

The global industry can be described as a highly fragmented market. Key players are particularly focusing on enhancing their product offerings and pursuing joint ventures to better cater to the changing needs of the end-users and remain competitive. In November 2020, Ciena Corp. announced that NTT Communications Corp. upgraded its DCI network by deploying a single-wave 800G line speed solution to accommodate the rising demand for cloud and gaming services in line with the continued rollout of 5G networks. Some of the prominent players in the global data center interconnect market are:

• Ciena Corp.

• NOKIA

• Huawei Technologies Co., Ltd.

• Juniper Networks, Inc.

• Infinera Corporation

• ADVA Optical Networking

• Cisco Systems, Inc.

• Extreme Networks

• Fujitsu

• Colt Technology Services Group Ltd.

• Brocade Communication Systems Inc. (Broadcom)

• Microsemi (Microchip Technology Inc.)

• Arista Networks, Inc.

• ZTE Corporation.

Recent Development

• In November 2022, Nokia provided Data Centre Interconnect (DCI) solutions to Africa Data Centres. These data centres enabled transparent and reliable connectivity with Nokia 7250 IXR platforms along with 400G-enabled interfaces

Data Center Interconnect Market Report Scope

Glpbal Data Center Interconnect Market Segmentation

The report forecasts revenue growth at global, regional, and country levels and provides an analysis of the latest industry trends in each of the sub-segments from 2017 to 2030. For the purpose of this study, Grand View Research has segmented the global data center interconnect market report based on type, end-use, and region.

• Type Outlook (Revenue, USD Million, 2017 - 2030)

  • Hardware

  • Software

  • Services

• End-use Outlook (Revenue, USD Million, 2017 - 2030)

  • Communications Service Providers (CSPs)

  • Internet Content Providers and Carrier-Neutral Providers (ICPs/CNPs)

  • Government/Research and Education (Government/R&E)

  • Others

• Regional Outlook (Revenue, USD Million, 2017 - 2030)

  • North America

    • U.S.

    • Canada

  • Europe

    • Germany

    • U.K.

    • France

    • Rest of Europe

  • Asia Pacific

    • China

    • India

    • Japan

    • Rest of Asia Pacific

  • Latin America

    • Brazil

    • Mexico

    • Rest of Latin America

  • Middle East & Africa