Service provider router sales benefit from 400G demand: Dell’Oro

Aug. 16, 2022
Wide-area network (WAN) and data center interconnect (DCI) applications will see much of the 400-Gbps action, according to Dell’Oro.

According to a recently published report by Dell’Oro Group, the trusted source for market information about the telecommunications, networks, and data center industries, Global sales of service provider (SP) routers and switches will enjoy a 2% percent CAGR that will enable revenues to approach $76 billion by 2026, according to Dell’Oro Group. The market research firm states in its new Service Provider Router & Switch 5-Year Forecast Report that demand for 400-Gbps routing technologies from telecom and cloud SPs will provide the catalyst for this growth.

Wide-area network (WAN) and data center interconnect (DCI) applications will see much of the 400-Gbps action, according to Dell’Oro. Overall, the cloud SP market will grow more quickly that the telecom SP segment, the market research firm believes. The demand for 400G in SP routers and switches will translate into a desire for 400G ZR modules, including for SP core routers.

“The July 2022 forecast remains in line with the January 2022 forecast, despite both emerging economic uncertainty and persistent market challenges,” commented Ivaylo Peev, senior analyst at Dell’Oro Group. “Emerging economic uncertainty, racing inflation, China’s zero-COVID-19 policy, and the war in Ukraine are depressing markets in 2022, putting pressure on vendors and customers alike. We adjusted our projections to account for these market challenges, but we have not changed the baseline guidance of the forecast, because we believe that the underlying fundamentals of the SP router market will remain healthy over the forecast period.”

On wild card in the SP router and switch deck is China, which has picked up infrastructure spending as a way to address the negative economic effects of the country’s COVID-19 lockdowns. According to official Chinese government statistics, investment in infrastructure increased by more than 8% in 1Q 2022. If such levels of government stimulus are sustained for the next four quarters – and a healthy share goes to technology-related infrastructure – Chinese SPs are likely to accelerate and expand their spending on networks, Dell’Oro believes.

Dell’Oro’s Service Provider Router & Switch 5-Year Forecast Report covers the SP router and switch market for future current and historical periods. The report includes qualitative analysis and detailed statistics for manufacturer revenue by regions, customer types and use cases, average selling prices, and unit and port shipments.

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About the Author

Stephen Hardy | Editorial Director and Associate Publisher, Lightwave

Stephen Hardy is editorial director and associate publisher of Lightwave and Broadband Technology Report, part of the Lighting & Technology Group at Endeavor Business Media. Stephen is responsible for establishing and executing editorial strategy across the both brands’ websites, email newsletters, events, and other information products. He has covered the fiber-optics space for more than 20 years, and communications and technology for more than 35 years. During his tenure, Lightwave has received awards from Folio: and the American Society of Business Press Editors (ASBPE) for editorial excellence. Prior to joining Lightwave in 1997, Stephen worked for Telecommunications magazine and the Journal of Electronic Defense.

Stephen has moderated panels at numerous events, including the Optica Executive Forum, ECOC, and SCTE Cable-Tec Expo. He also is program director for the Lightwave Innovation Reviews and the Diamond Technology Reviews.

He has written numerous articles in all aspects of optical communications and fiber-optic networks, including fiber to the home (FTTH), PON, optical components, DWDM, fiber cables, packet optical transport, optical transceivers, lasers, fiber optic testing, and more.

You can connect with Stephen on LinkedIn as well as Twitter.

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