Demand for 400 Gb/s routers is on the rise due to the push by telco and cloud service providers to upgrade their IP backbones in the wake of the COVID-19 pandemic, according to Dell'Oro Group Senior Analyst for SP router and switch research Ivaylo Peev.

Peev says cloud service providers initially led the charge toward 400 Gb/s routers and are moving fast to upgrade their networks, but the telco market is a much larger opportunity.

"We believe that Cloud SPs were the first to adopt 400 Gb/s routers, beginning with large-scale backbone network deployments in 2021. As they aggressively enrich their service offerings and expand their customer bases, we believe that Cloud SPs are expanding their network infrastructure faster than Telco SPs," wrote Peev in a blog today. "However, the market opportunity generated by Cloud SPs is relatively small compared to that of Telco SPs. Over the next five years, we estimate that Cloud SPs will account for about a third of the Core Router Market."

According to Peev, 400 Gb/s technology will lead the "next phase of internet backbone expansion" because the internet backbone includes traffic from both cloud and telco service providers, and transports traffic from mobile and broadband service networks and cloud infrastructure. "We expect that most 400 Gb/s router ports will be deployed in IP backbone networks over the next five years and that 400 Gb/s technology will lead the next phase of internet backbone expansion," he wrote.

The analyst firm estimates the market for 400 Gb/s to be worth $17 billion for the five-year period from 2022 to 2026, due to network operators continuing to "deploy 400 Gb/s ports to deliver 4×100 Gb/s connections using breakout modules and adapters, as well as software activation keys."

Prior to 2021, telcos did not upgrade their networks to meet the spike in demand created by COVID-19, but that is changing. Now they are "adding 400 Gb/s ports in their backbone networks for two primary reasons: economic efficiency and increased traffic levels," wrote Peev.

"By using the newest generation of high-capacity ASICs, 400 Gb/s routers offer the benefits of higher speeds per port with decreased energy consumption, thus reducing the total number of ports required and, in turn, the size of the chassis, saving valuable rack space," he wrote.

"The higher speed per port also lowers the cost per bit per port, because the cost of one 400 Gb/s port is typically lower than the cost of four 100 Gb/s ports. Combined with the reduced energy consumption and the smaller, space-saving format of the router, transitioning to 400 Gb/s ports enables SPs to make more economically efficient investments and lower operating costs," Peev added.