Report: Cloud, Video Spur Data Center Interconnect Boom

The data center interconnect market is booming, according to Ovum Research. Global data center interconnect equipment vendor revenue reached $2.5 billion in 2014, growing more than 16 percent annually. Ovum expects their revenue to hit $4.2 billion by 2019.

The market is being driven by enterprises moving toward cloud and growth of video. The global DCI market is projected to grow at 10.5 percent compound annual growth rate until 2019.

Communications equipment vendors are fighting for the market, with Ovum ranking Ciena as top vendor. Ciena leads in government, research and experimentation, and enterprise end user segments. Alcatel-Lucent leads in the cloud service provider market, while Infinera is in the lead with internet content provider and carrier-neutral provider segments.

This is arguably a tipping-point year for metro networks. The changing nature of workloads means the way networks are constructed is changing. Because there are more and more clustered data centers in metros, for example, demand for high-capacity low-cost optical gear is on the rise, according to the analysts. Ovum notes a big opportunity for optical data center interconnect.

The year "is shaping up to be a very exciting year as metro-optimized 100G and adaptable-rate flex-spectrum 200G/400G capabilities enter the [data center interconnect] market,” said Ron Kline, an Ovum analyst, in a press release.

Primarily, data center operators lease data center interconnect services from communications service providers. An interesting evolution in the market, notes Ovum, is a growing number of internet companies like Google and Facebook securing fiber assets and building their own interconnect networks.

Close to half of all data center interconnect spending in 2014 was from communications service providers, but the internet content provider segment is growing fast, at 64 percent.

Last year, Cisco noted data center traffic is expected to triple by 2018 as the cloud shift continues.