Data Center Interconnect Market worth 17.0 billion by 2026

Posted by Steve Stark on January 20th, 2022

According to a research report \"Data Center Interconnect Market by Type (Products, Software, Services), Application (Real-Time Disaster Recovery and Business Continuity, Workload (VM) and Data (Storage) Mobility), End User and Region - Global Forecast to 2026\" published by MarketsandMarkets, the data center interconnect market is projected to grow from  USD 8.6 billion in 2021 and is projected to reach USD 17.0 billion by 2026; it is expected to grow at a CAGR of 14.5 % from 2021 to 2026.

The migration of enterprises towards the cloud, growing borderless nature of global economy coupled with recent surge in the consumption of OTT services is expected to fuel the growth of the data center interconnect industry.

“Managed services to grow at a higher rate during the forecast period”

Managed services are expected to witness an above-average growth owing to several benefits, including remote management of customers IT infrastructure and systems of end-users, typically on a proactive basis and under a subscription model. The services market is expected to grow at the highest rate during the forecast period, as services help in achieving critical targets, developing a skillset for improving the internal planning and control process, and remotely managing customers  IT infrastructure and systems of end-users.

“Enterprise end-user segment to grow at the highest rate during the forecast period”

Enterprises end-user segment is expected to grow at the highest rate during the forecast period. A large majority of enterprises use or are planning to use hybrid cloud infrastructure to maintain tight control over mission-critical data. As a result, for many enterprises, the hybrid cloud runs in multiple different types of data centers. Connecting a hybrid cloud means connecting many or all these types of data centers, thereby pushing the need for data center interconnect solutions. Growing penetration of digital services across several industry verticals has resulted in the increased demand for data centers for storage, computing, and network management. This, in turn, will drive the demand for data center interconnect market. Increased employee mobility, adoption of bring-your-own-device, and bring-your-own-application, and big data explosion are impacting the future needs and requirements for enterprise DCI solutions. These include high performance, low latency, and secure optical WDM solutions. The real-time disaster recovery and business continuity application is the most common application for enterprise DCI. The application for dynamic workload scheduling and data replication, particularly cloud-based, will have growth areas for enterprise DCI in the future.

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“Real-time disaster and business recovery application segment to dominate the data center interconnect market throughout forecast period ”

The real-time disaster and business recovery application segment is expected to dominate the data center interconnect market from 2021-2026. The DCI solutions enables geographically separated data centers to easily participate in any form of business continuity and disaster recovery (BCDR) strategy. When the physical delineation between data centers is removed, critical business information can be backed up, replicated, or accessed in real-time, and active-active or active-standby strategies can be implemented much more simply. In the event of failures or IT maintenance schedules, workloads can be easily moved or recovered in any locations. It minimizes the effects of outages and disruptions on business operations. It reduces the risk of data loss and reputational harm and improve operations while decreasing the chance of emergencies. As business downtime can result in huge financial losses, there is a growing demand for DCI solutions that are widely being deployed in organizations for ensuring security and business continuity paving way for the market growth.

“North America held the largest share of data center interconnect market in 2020 and is expected to hold second-largest share by 2026”

North America is expected to account for the largest share of the data center interconnect market during the forecast period. North America held the largest market share in 2020 owing to the early adoption of DCI technologies by countries such as the US and Canada. An increase in the use of data centers across various business verticals and early adoption of the latest technologies in the region is expected to drive the market in this region. Several US-based companies such as Amazon Web Services (AWS), Google, and Microsoft are increasing their investments in data center construction. The growth will be driven by the US, where data centers manage high volumes of data generated. Extensive use of optical interconnects in the data centers of the US is another driving factor for the market in this region. This region is home to several major players in the data center interconnect market; some of these are Ciena Corporation (US), Juniper Networks, Inc. (US), Infinera Corporation (US), Cisco Systems (US), Extreme Networks, Inc. (US). These companies have contributed to the growth of the data center interconnect market in the North America by launching innovative products and services and spending extensively on the R&D of DCI solutions.

Key players in the data center interconnect market include Ciena Corporation (US), Nokia Corporation (Finland), Huawei Technologies (China), Juniper Network Inc. (US), Infinera Corporation (US), ADVA Optical Networking SE (Germany), CISCO Systems (US), Extreme Networks, Inc. (US), and Fujitsu Ltd. (Japan). Apart from these, XKL LLC (US), Ekinops S.A(France), Cologix (US), Pluribus Networks (US), Ranovus (Canada), Innovium (US), ZTE Corporation (China), Megaport (Australia), Flexential (US), Cyxtera Technologies (US), Fiber Mountain (US) are among a few emerging companies in the data center interconnect market.