As the data center interconnect (DCI) segment deploys scale-across architectures, it is facilitating new growth patterns in IPoDWDM and Disaggregated WDM, with a move toward ZR+ optical pluggable modules beginning this year.

According to new Dell’Oro Group research, the market for IP-over-DWDM (IPoDWDM) is forecast to grow at a 27 percent compounded annual growth rate (CAGR) for the next five years, surpassing $7 billion by 2030.

Jimmy Yu, Vice President at Dell’Oro Group, noted that AI is driving demand for new optical transport equipment, particularly ZR/ZR+ optics.

“Building of AI infrastructure is creating such a large shift in optical transport demand that we have had to raise our forecasts across multiple technology segments, especially IPoDWDM and Disaggregated WDM—both of which are heavily used for connecting the front-end of cloud data centers across metro and long-haul spans,” he said.  

Yu added that “the next big thing is scale-across DCI, or connecting the back end of AI data centers, to form larger AI training facilities.”

800 ZR+ drives IPoDWDM

Driven by demand for 800 ZR+ optics, Dell’Oro noted that hyperscalers’ requests for IPoDWDM “accelerated” in the first quarter.

The research firm estimates that IPoDWDM revenue grew over 30 percent year-over-year in the quarter.

Cisco Acacia led the ZR/ZR+ market in terms of module shipments.

Chuck Robbins, CEO of Cisco, noted during the company’s third-quarter and fiscal year 2026 earnings call that hyperscalers totaled $1.9 billion, up from $600 million in the year prior, “with strong growth across our Silicon One systems and market-leading Acacia Optics.”

He added that “year-to-date total of $5.3 billion in orders taken from hyperscalers already exceeds our prior expectations of $5 billion for FY '26 with a full quarter remaining.”

Right behind Cisco was Marvell, with the next-highest shipment share.

The company continues to enhance its position by expanding its multi-generational ZR/ZR+ and coherent DSP technology portfolio. Earlier this year, Marvell introduced its COLORZ® 1600 1.6T ZR/ZR+ DCI pluggable and 2nm coherent DSPs, featuring media access control security (MACsec) to scale AI data center connectivity securely.

Marvell also introduced Libra, a 2nm 800G ZR/ZR+ coherent DSP, which enables a lower-power, second-generation COLORZ 800 pluggable.

Matthew Murphy, CEO of Marvell, said during its first-quarter 2027 earnings call that its latest offerings enable it to address aggregate bandwidth requirements at scale across networks, which are projected to be more than 10x higher than those of current front and DCI networks.

“Marvell is exceptionally well-positioned to lead this transition with the industry's first secure 1.6T ZR and ZR+ DCI modules powered by our new 2-nanometer coherent DSP announced earlier this year,” he said. “These modules are expected to begin sampling this year. This position enables Marvell to extend our technology leadership into the emerging scale across the market, supported by our proven expertise in high-volume manufacturing of these highly specialized and complex modules.”

Looking forward, Dell’Oro forecasts that ZR/ZR+ optical pluggable module shipments, most of which will be installed on routers and switches, will have a five-year CAGR of 29 percent.

Disaggregated WDM outperforms

Disaggregated WDM, which includes IPoDWDM ZR/ZR+, transponder units, and optical line systems, is becoming a key factor.

Led by Ciena and Nokia, Dell’Oro noted that disaggregated WDM “continued to outperform the integrated systems market and grew 50 percent year-over-year in the quarter.”

Ciena currently leads the market with about 40 percent market share, followed by Nokia.

Disaggregated WDM is forecast to grow at a five-year CAGR of 17 percent, approaching $13 billion by 2030.

The research firm said this “growth is projected to be driven by both cloud providers and communication service providers (CSPs).”

For related articles, visit the Optical Topic Center.
For more information on high-speed transmission systems and suppliers, visit the Lightwave Buyer’s Guide.
To stay abreast of fiber network deployments, subscribe to Lightwave’s Service Providers and Datacom/Data Center newsletters.