Data center interconnect (DCI) equipment revenue will increase 85 percent over the next five years. It will jump from $2.7 billion in 2017 to $5.1 billion in 2022, according to Dell’Oro Group’s first DCI report. This represents a five-year compound annual growth rate (CAGR) of 13 percent.
But while revenue from this type of networking technology will surge over this period, driven largely by cloud platforms and services, “we found there isn’t a clear idea of what data center interconnect is,” said Shin Umeda, vice president at Dell’Oro. DCI doesn’t have a standards-based or technical definition. And because of this, different people and companies use DCI to describe various network types and products. This makes it difficult to quantify the market size and opportunity.
So part of the report’s intent is simply to set a DCI infrastructure framework from a networking perspective and quantify the infrastructure market around this framework. In other words: “what different technologies are used in data center interconnect, where they are used, and how they are being used,” Umeda said. “Hopefully to provide a picture of all the pieces that are going into data center interconnect.”
3 Network Segments
For this report, Dell’Oro categorizes the equipment used for DCI infrastructure into three network segments: optical transport networks, data center core networks, and wide area networks (WAN). It forecasts that optical will account for more than half of the DCI market in each of the years, starting at 56 percent contribution in 2017 and declining to 53 percent in 2022.
WAN equipment revenue will increase from 24 percent in 2017 to 29 percent in 2022. Telco clouds and 5G rollouts are contributing to WAN equipment growth, Umeda said.
And finally, data center core, which contributed 20 percent of the market in 2017, will drop to 18 percent in five years.
Ciena led the optical transport networks market in 2017, and Juniper Networks led the WAN and data center core networks markets. Dell’Oro won’t disclose these vendors’ revenue shares. But Umeda said Ciena captured almost one-third of the optical DCI market, and Juniper raked in almost half of the combined data center core and WAN DCI market share.
“The point is: all these technologies are interrelated,” from the fiber optic layer up to the packet forwarding layer, Umeda said. “We separated this into three areas of networking, but there’s a lot of places where this is blurry, and it’s going to continue to move in that direction.”
The analyst firm predicts that in the future optical equipment will integrate with routing and switching products as companies make acquisitions and develop their own technologies. Ciena is talking about integrating packet technology into their products, and vendors including Cisco and Juniper are working on similar blended technologies, he added. “It’s all nice and clean to put products in buckets. But in reality, these things are spilling over. Right now we are in the early days,” he said.
What’s SDN Got to Do With DCI?
How does SDN fit into all of this? Umeda said it’s critical. SDN not only manages the networks, but it also allows cloud service providers to differentiate their interconnection services.
For example, Equinix’s Cloud Exchange Fabric uses SDN to enable any customer to connect its own infrastructure across Equinix locations, or connect to any other customer on Equinix’s global platform.
And Google has its own SDN platform called Andromeda. Google’s network is completely dependent on SDN, according to Google Fellow Amin Vahdat who spoke at the Open Networking Foundation’s Connect event last week.
“None of this would be possible without SDN,” Umeda said. “[DCI] is really driven by cloud and the big cloud providers, and a big differentiator for them is how they are using SDN to optimize their business.”