Data Center Growth Driving ON Market: Report

New research released Monday suggests that the optical networking market and data centers will maintain their symbiotic relationship, with increasing numbers of sites in Latin America driving the sharpest growth.

A report from the U.K. analyst firm Ovum expects the ON market to reach $20 billion by 2017, with a 5 percent compound annual growth rate. Although Ovum believes that the North American market will continue to experience “solid” growth in the ON space, the firm—perhaps unsurprisingly—indicated that less mature markets will grow the most rapidly.

Selecting a data center site is predicated on a number of factors—available power, property and site costs, and proximity to customers, among others—but the availability of high-speed data connectivity is a must. Ovum highlighted Facebook’s 2011 decision to build a massive data center in Lulea, Sweden, where the frigid climate will assist in cooling, as one site that will need to ensure that high-speed data connectivity is not neglected.

“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,” said Ian Redpath, principal analyst in Ovum’s Network Infrastructure practice, in a statement. “The data centers are being placed in brand new locations, creating brand new optical networking demands.”

He added: “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.”

The Rise of Latin America

Ovum said that the highest growth region will be Latin America, driven by network modernization efforts to enhance regional connectivity in support of mobile and broadband access network build-outs. The firm attributed that to the rise in personal incomes, which has in turn prompted consumer spending on broadband services. That has pushed carriers and other providers to build out their inter- and intra-continental connectivity capabilities.

Ovum characterized the North American market as “solid,” with a “perfect deployment storm” rolling in. Ovum claimed that American data centers have saturated their 10G equipment, and that the next generation of network technology, or 100G capabilities, was nearing completion. Verizon, for example, has moved from 100G optical technology in its European backbone to 100G in long-haul within American markets, with plans to make it a staple within the North American metro market sometime next year.

In Asia, meanwhile, Russian network operators have visions of supplying pan-Asian capacity interconnecting the Far East to Europe, Redpath claimed.

“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,” he said.

According to Ovum, the evolution of new, next-generation optical equipment is arriving at the right time. In any event, the appetite of the world’s largest Web 2.0 firms is being fed via its optical pipes, making them a critical avenue for investment.


Image: VAlex/

Post a Comment

Your email address will not be published.