Data center interconnection refers to the networking of two or more different data centers to accomplish various business or IT goals. This interconnectivity between data centers allows them to work together, share resources, or pass workloads between them. A massive wave of change caused by cloud computing, mobility, social media, and big data analytics is sweeping through data centers, and with it, a flood of data.
Market Overview
The global data center interconnect market size is expected to grow from $7.9 billion in 2020 to $14 billion by 2025. The CAGR is expected to grow at a CAGR of 12.1% from 2020 to 2025. Drivers such as the migration to the cloud and the growing borderless nature of the global economy, as well as opportunities such as the expected proliferation of 5G deployments and applications, are expected to drive the growth of the data center interconnection industry.
The data center interconnect services market is expected to grow at a higher rate
Based on type, the market is segmented into three segments: software, services, and products. The Services segment is further divided into Professional Services and Managed Services. The product segmentation is further divided into packet optical networks, packet optical transmission, converged packet optics, and packet switching networks. The services segment is expected to register the highest CAGR during the forecast period. The service helps to acquire key objectives, develop skills for developing internal planning and control processes, and remotely maintain the customer's, IT infrastructure, and end-user's systems. The managed services market is expected to grow at a high CAGR as they provide system administration, security management, hardware assurance, and monitoring. Although the service market is the fastest-growing, it is the product applications that occupy the largest market share. The main reason is that in today's fierce market competition, only real products are the core competitiveness, and services as a value-added industry of products, the proportion is naturally less.
The data center interconnect market in Asia-Pacific is growing at the highest CAGR
In the not-too-distant future, the Asia-Pacific region is expected to have the fastest-growing data center interconnect industry. The increasing adoption of optical interconnects in data centers, metro networks, and long-haul networks is a major driver of growth in the region. Digital technologies and cloud computing are rapidly changing the enterprise communications landscape across China and driving the need for more scalable, flexible, and efficient DCI services. The growing demand for wireless and screen interaction, video, and demographic analytics is driving the growth of the DCI market in the country.
Recently, Ciena Corporation acquired privately held Centina, a leading provider of service assurance analytics and network performance management solutions. Service providers use Ciena's Blue Planet Packet DCI solution, powered by Blue Planet MDSO, to intelligently automate operations and end-to-end service fulfillment across multi-vendor domains. The current focus is on accelerating Blue Planet's software strategy to deliver closed-loop intelligent automation solutions to help communications service providers increase operational agility while delivering highly differentiated customer experiences. Currently, Ciena Corporation's focus is on the North American market. However, Ciena can expand its geographic focus by driving organic growth in the APAC market. For example, Ciena could capture a larger market share in the Indian market as ambitious initiatives by some governments such as the Digital India Plan will result in more data being generated across platforms such as cloud and social media, and more people using mobile technology to access it.
Huawei has recently been working to address the limitations faced by data centers that run cloud computing and big data quickly, such as traffic migration and bandwidth failures. Huawei attaches great importance to next-generation networks and continues to accelerate technological innovation. To cope with the growth of traffic between data centers beyond the scope of their configurations, they are using 600G technology to reduce cost per bit and build a more competitive DCI network. A growth strategy that involves expanding their presence in North America can help them drive future growth. The North American market is attractive due to the increasing use of data centers across business verticals and its early adoption of the latest technologies. Moreover, the growth rate is driven by countries such as the United States, where data centers manage a large amount of data, thereby driving the growth of the market.
Application analytics
Based on application, the market is segmented into workload and data mobility, real-time disaster recovery and business continuity, and shared data and resource and server high-availability clusters. The Estimated Shared Data & Resources & Server High Availability Cluster segment witnessed the highest CA GR during the forecast period. Shared data and resources and server high-availability clustering detects hardware as well as software failures and immediately provides a path to applications on different systems without administrative intervention. Shared data and resources and server high-availability cluster applications are increasingly required to deploy DCI because it provides the benefits of workload security to globally distributed data centers. Real-time disaster recovery and business continuity are the most widely used market trends, accounting for more than three-quarters of the market share over the years. The other three applications accounted for 8.77%, 7.92% and 4.20% of the market share in 2018, respectively.
The prospects for future development are bright
There are a number of factors driving the global data center interconnect market today. There is a growing focus on reducing the high bandwidth and power consumption of data centers, which will be the major driving force for the market. In addition, business continuity, the growing demand for disaster recovery and data backup services are also driving the growth. The migration to cloud-based services has increased the demand for data centers, which is expected to boost the growth of the data center interconnect market. All in all, due to the increasing demand for data interconnection centers, the development prospects of the data interconnection center market are promising.