Optical Communication and Networking Equipment Market

Optical Communication and Networking Equipment Market Outlook

The optical communication and networking equipment market is anticipated to document a CAGR of 7.3% during the period of 2022-2032. The market is anticipated to reach US$ 44.5 Billion in 2032, increasing from US$ 22 Billion in 2022.

“The acceleration in deployment of VOIP, LTE, and 5G networks is expected to provide lucrative opportunities for the market growth, which in turn is anticipated to propel growth of the optical communication and networking equipment market.”

Key factors such as surge in data traffic owing to the increased internet usage, increasing number of data centers, and rise in adoption of cloud based as well as virtualization services fuels growth of the market.

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What are the Factors which Frontline the Growth of Optical Communication and Networking Equipment Market?

Rising adoption of cloud-based services and virtualization services all over the world, increasing data traffic due to increased internet usage, and growing number of data centers are some factors that are expected to accelerate the growth of optical communication and networking equipment market during the forecast period. Moreover, the market is expected to witness a recovery in its growth rate in the coming years, owing to the growing focus of organizations to fulfill upsurge in demand for telecommunication equipment driven by rapid acceleration in 5G deployment across the globe.

Additionally, the pandemic has boosted the number of fiber optic broadband lines around the globe due to more data traffic as well as new broadband demands with people staying at home. For instance, according to IDATE, a Media company and the FTTH Council Europe, a non-profit organization, high speed fiber will pass 202 million houses in the European Union and Britain by 2026, up from 88.1 million in 2019. This is mainly driven by the acceleration in demand for faster internet services due to COVID-19 pandemic.

Further, major factors such as surge in data traffic owing to the increased internet usage, increasing number of data centers, and rise in adoption of cloud based as well as virtualization services fuels growth of the market. In addition, an increase in demand for advanced network equipment due to COVID-19 pandemic is anticipated to propel the growth of the market during the analysis period. The acceleration in deployment of VOIP, LTE, and 5G networks is expected to provide lucrative opportunities for the market growth. In addition, rise in adoption of AI and IoT is anticipated to be opportunistic for the growth of the optical communication and networking equipment industry during the forecast period.

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What are the Opportunities for the Optical Communication and Networking Equipment Market?

The modern data center networks with their vast bandwidth and scale requirements are adopting optical communication and networking equipment. Only the optical communication technology has demonstrated capacities of 10 GB/s, 40 GB/s, and higher, over large distances. Therefore, increasing number of data centers across the globe depend on interconnects for delivering critical communications connectivity among numerous servers, computation, and memory resources. However, factors such as explosive growth of Internet Protocol (IP) traffic and growth of cloud computing is driving number of data centers around the globe. Therefore, increase in number of data center significantly fuels the growth of the optical communication and networking equipment market.

In addition, increasing adoption of cloud based and visualization service in several sectors, escalating demand for IoT solutions, and surging number of optical data centers are fueling market growth. In addition, rising trend of using higher bandwidth devices and growing requirement for 5G infrastructure are augmenting industry outlook. Moreover, an increase in penetration of smartphones in the global market and rising demand for mobile broadband services are the main driving force behind the tremendous growth of global optical communication equipment market. The advanced technologies like cloud computing and cloud storage also helps this market to growth with significant CAGR over the forecast period.

Additionally, the recent establishments of data centers by major technological companies also act as a driver for the optical communication equipment market. With the growth of increase in usage of internet worldwide which increased due social networking, gaming and online shopping etc. there is an increase in demand for higher bandwidths from both residential and businesses. Furthermore, recent government programs in developing countries and telecommunication liberalization worldwide can predict an increase in demand for optical communication equipment market.

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What are the Challenges faced by the Optical Communication and Networking Equipment Market?

The optical communication and networking equipment market provides numerous features such as deeper win insights and attribution around drivers, as well as greater sales targeting efficiency, but has few restraints as well.

High initial deployment cost is a major restrain to market growth however, high bandwidth requirements by the enterprises and government organizations are facilitating the deployment. Limited infrastructure for fiber-optic networks could pose a challenge to the optical network equipment market.

Moreover, the high cost of long-distance cables poses a challenge for optical communication but the long-term returns are high. In addition, the rising network complexities is one of the major factors that is expected to hinder the growth of the optical communication and network equipment market over the analysis period.

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Comparative View of Adjacent Optical Communication and Networking Equipment Market

Comparative View of Adjacent Optical Fiber Market

Comparative View of Adjacent Optical Amplifier Market

The amount of information traveling across the internet is experiencing continuous growth, as more number of devices are connected as well as new applications are being developed. For instance, this growth is demonstrated in the Cisco Visual Networking Index, which shows that Internet Protocol (IP) traffic across the globe is increasing rapidly and the mobile data traffic is estimated to grow exponentially and reach about 30.6 exabytes per month in 2020. In addition to this, a growing number of smartphone users is projected to boost the internet usage.

Moreover, as the internet traffic increased exponentially, with more number of diversified services and applications, the capacity of optical networks has expanded accordingly. Fiber optics offer increased bandwidth to its users; hence, there is upsurge in demand for optical communication and networking equipment. This factor primarily drives the growth of the optical communication and networking equipment market.

A gradual increase in the IPTV and broadband connections is also adding up to the optical networking market growth. Increasing optical network infrastructure worldwide such as the installation of optical fiber to meet the demand for bandwidth-intensive applications is expected to drive the optical network equipment market.

Additionally, growing data center interconnection and network access deployments are estimated to positively impact market growth. Additionally, various benefits such as advanced security, high restoration capacity, and return on investment, simplified operations, and optimized bandwidth connectivity are also expected to propel the optical network.

Growing research investments and continuous technological advancements may offer new opportunities to the optical network equipment market. Adoption of optical fibers and reconfigurable optical add-drop multiplexer (ROADM) equipment are expected to gradually replace non-optical fiber networks. Main advantages of ROADM include automatic power balancing, remote configuration based on requirements without affecting the traffic. The rising demand for FTTH has strengthened the growth of the market. Various advantages of FTTH such as high speed, reliability, and capacity are expected to favor the market. The emergence of Bit-Interleaved Passive Optical Network (Bi-PON) technology which enables a power reduction of 30% over current technologies while improving performance and reducing cost is also expected to provide new market growth opportunities.

The latest technological advancements and advent of industry 4.0 has propelled optical communication and networking equipment market. The rising adoption of cloud-based and virtualization services globally is one of the key factors which will foster market growth.

What is the Segmentation Outlook for the Optical Communication and Networking Equipment Market?

By Component, the optical fibers segment of the market is estimated to witness the highest CAGR of 6.8%, during the forecast period. The factors can be attributed to the introduction and adoption of new applications such as wearable devices, IoT, and cloud computing owing to the change in consumer needs.

The increasing internet penetration and data traffic are leading to the rapid growth of data centers, along with the need for high transmission networks driving the acceptance of the optical transceivers segment.

Which Segment is likely to lead the Optical Communication and Networking Equipment Market by Technology?

WDM technology to dominate the optical communication and networking equipment market with the highest CAGR of 6.7% during the forecast period. The development of ROADM-based WDM networking solutions is one of the emerging trends in the global optical networking and communications market.

Manufacturers are investing huge capital in building WDM ROADM-based optical equipment so that they can provide faster and higher transmission capacity networks to their customers.

Which is the Key Region in the Optical Communication and Networking Equipment Market?

The global optical communication and networking equipment market by region covers five major geographic regions: North America, Europe, Asia Pacific (APAC), Middle East and Africa (MEA), and Latin America.

Asia Pacific dominates the optical communication and networking equipment market during the forecast period, owing to the growing adoption of smartphones, a growing number of internet users, the rising demand for connectivity, growing focus on improving existing networks and establishing new connectivity networks, increasing bandwidth-intensive applications, such as video-on-demand services, and availability of government funding will boost the market in Asia Pacific region.

In addition, Asia-Pacific is estimated to be the largest market, with China, Japan, South Korea, and India being the major countries with lucrative growth opportunities. The region is the major hub of consumer electronics along with automobiles, and industrial verticals. Rising connectivity solutions from 3G to 4G technology, increasing spending for the development of 5G mobile technologies, and growing number of internet users, are some other major growth drivers of the region’s market. Increasing investments in R&D activities, and rising focus of IT companies on the growth of big data analytics and cloud-based services in the region are expected to further fuel the growth of this market.

The U.S is expected to represent a massive growth of US$ 15.6 Billion, with a CAGR of 6.9% during the forecast period. Whereas, China is expected to represent a CAGR of 6.8% to reach a market share of US$ 3.2 Billion during the forecast period. On the other hand, Japan is expected to represent a CAGR of 6.3%, to reach a market share of US$ 2.7 Billion during the forecast period. U.K is expected to represent a CAGR of 5.7%, to reach a market share of US$ 1.9 Billion during the forecast period. Besides, South Korea is expected to represent a CAGR of 6.1%, to reach a market share of US$ 1.8 Billion during the forecast period.

How does Competition Influence the Optical Communication and Networking Equipment Market?

Arista Networks, Inc., Cisco System Inc., Fujitsu Optical Components Limited, Huawei Technologies Co., Ltd., Juniper Networks, Inc., Mitsubishi Electric Corporation, NEC Corporation, Nokia Corporation, Telefonaktiebolaget LM Ericsson, and ZTE Corporation, among others are the top companies in the global optical communication and networking equipment market.

In order to strengthen their position in the global optical communication and networking equipment market, organizations are focused on industry collaborations, mergers & acquisitions, and partnerships.

The research offers a comprehensive competition analysis of some top competitors in the optical communication and networking equipment market, including company biographies, recent developments, and significant market strategies. It shows how the competitors are taking advantage of the opportunities present in the optical communication and networking equipment market.

• In October 2020, Fujitsu Optical Components Limited (FOC) announced their new product, a 400G ZR+ Transceiver that enables coherent WDM transmission greater than 120km in the same form factors (QSFP56-DD and OSFP) as its 400G ZR transceiver. Both transceivers use advanced coherent technology to enable higher bandwidth capacity and lower cost per bit compared to existing 100G WDM technology.
• In March 2020, Ribbon Communications Inc., a global software leader in secure and intelligent cloud communications, completed its previously announced acquisition of ECI Telecom Group Ltd. (ECI), a global provider of end-to-end packet-optical transport and SDN/NFV solutions for service providers, enterprises, and data center operators.
• In October 2019, Ciena acquired privately-held Centina, a leading provider of service assurance analytics and network performance management solutions. Centina’s industry-leading technology and engineering expertise would be integrated into Blue Planet, a business division of Ciena’s Software and Software-related Services segment.
• In March 2019, Huawei launched the world’s first single-wavelength 50G passive optical network (PON) prototype, which can provide 50 Gbps downstream transmission rates and 25 Gbps/50 Gbps upstream transmission rates over a single wavelength, at the Mobile World Congress 2019. This launch shows Huawei's move to support 50G PON research.

Report Scope

Key Segments Covered in the Optical Communication and Networking Equipment Market Report

Optical Communication and Networking Equipment by Component

• Optical Communication and Networking Fibers
• Optical Communication and Networking Transceivers
• Optical Communication and Networking Amplifiers
• Optical Communication and Networking Switches
• Optical Communication and Networking Splitters
• Optical Communication and Networking Circulators
• Optical Communication and Networking Sensors
• Other Optical Communication and Networking Equipment

Optical Communication and Networking Equipment by Technology

• WDM-based Optical Communication and Networking Equipment
• CWDM-based Optical Communication and Networking Equipment
• DWDM-based Optical Communication and Networking Equipment
• SONET-based Optical Communication and Networking Equipment
• Fiber Channel-based Optical Communication and Networking Equipment

Optical Communication and Networking Equipment by Vertical

• Optical Communication and Networking Equipment for BFSI
• Optical Communication and Networking Equipment for Government
• Optical Communication and Networking Equipment for Healthcare
• Optical Communication and Networking Equipment for Cloud
• Optical Communication and Networking Equipment for Energy & Utilities
• Optical Communication and Networking Equipment for Other Verticals

Optical Communication and Networking Equipment by Data Rate

• Optical Communication and Networking Equipment Up to 40 Gbps
• Optical Communication and Networking Equipment Greater Than 40 Gbps to 100 Gbps
• Optical Communication and Networking Equipment Greater Than 100 Gbps

Optical Communication and Networking Equipment by Application

• Optical Communication and Networking Equipment for Telecom
• Optical Communication and Networking Equipment for Data Centres
• Optical Communication and Networking Equipment for Enterprises

Optical Communication and Networking Equipment by Region

• North America Optical Communication and Networking Equipment Market
• Europe Optical Communication and Networking Equipment Market
• Asia Pacific Optical Communication and Networking Equipment Market
• Middle East and Africa Optical Communication and Networking Equipment Market
• Latin America Optical Communication and Networking Equipment Market