Dell’Oro tips optical transport market to hit $18B by 2026

A fresh report from Dell’Oro Group forecasts the optical transport market will grow at a 3% compound annual growth rate (CAGR) over the next five years to hit a total of $18 billion. That figure represents an increase from around $15 billion in 2021, Dell’Oro VP Jimmy Yu told Fierce.

Growth is expected to be led by sales of DWDM systems that support speeds of more than 200 Gbps and will be seen in all regions across the world. Coherent wavelength shipments on DWDM systems are expected to grow at a CAGR of 12% over the forecast period. The ZR optics market – which includes 400ZR and 800ZR modules – is forecast to exceed $600 million in the same period.

“Drivers of our growth prediction include the growing global economy, government initiatives to fund the reach of broadband to rural areas and overall network upgrades to align with customer demand for more bandwidth,” Yu said in a statement. However, that growth won’t come without some bumps in the road.

Yu told Fierce he’s got his eye on three key issues. First, he pointed to “ongoing component shortage and supply chain bottlenecks that have resulted in higher costs and delayed shipment of WDM systems to customers.” He also noted additional Covid-19-related lockdowns in countries like China could delay equipment installations and manufacturing. And finally, he said he’ll be watching to see whether the availability of 400ZR pluggable optics give IP-over-DWDM systems a “real chance at being adopted in place of WDM systems.”

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In terms of the vendor landscape, Yu said the current market leaders by revenue share are Huawei, Ciena, ZTE, Nokia and Infinera, which together account for nearly 80% of the market. Excluding sales into China, he said the top five vendors are Ciena, Huawei, Nokia, Infinera and Fujitsu, which again would account for around 80% combined share.