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Optical Networking and Communication Market Overview
The global optical networking and communication market is estimated to value $25.9 billion in 2018 and is projected to advance at a CAGR of 7.6% during 2019–2024, on account of the surging demand for high-bandwidth networks and data-intensive applications; the emergence of internet of things (IoT) and machine-to-machine (M2M) communication technologies; and the growing number of data centers worldwide.
In the report, the optical networking and communication market has been categorized into access, metro, and long-haul network connectivity. Among these categories, the market is expected to register significant growth in metro connectivity during the forecast period. The market for this category is highly competitive and service-oriented. Metro network caters to various customers in diversified applications such as data center interconnect (DCI), mobile transport, wholesale services, and enterprise wavelength and packet connectivity services. The category is witnessing a high demand for optical networking and communication solutions from data centers, globally.
The global IP traffic is projected to increase threefold over the next five years. Consequently, the market is expected to witness a rise in the number of data centers, with increased investments by IT companies. Moreover, the rapid adoption of mobile computing, IoT, and cloud computing is resulting in the establishment of data centers, which, in turn, is boosting the growth of the optical networking and communication market.
The optical networking and communication market has also been categorized into data centers in addition to telecommunication, cable/broadcasting, government, commercial, and industrial end-users. In the end-user category, the market is witnessing notable growth in the telecommunication industry, which is buoyed by increasing smartphone and internet penetration and social media inclination. Especially in the developing countries, such as China and India, the governments are focusing on infrastructural development, as well as network management and planning, in order to enhance optical networking and communication in the digitally supported business landscapes. For instance, the Government of India is leveraging its increasing subscriber base in the country and acting proactively, through various initiatives and policies, to attract investments in the telecom sector and improve connectivity in the country.
In addition, the development of mobile technology platform 5G is expected to support the growth of the optical networking and communication market in the telecom sector, owing to the increasing penetration of IoT, autonomous vehicles, and mobile media globally. Besides, declining sensor prices and increasing consumer demand for connected devices are supporting the market growth. Furthermore, telecom providers have the opportunity to develop next-generation optical networks and applications for new telecom services to attract customers. Thus, new telecom services in the form of large-scale networking solutions, customer-oriented solutions, and diversified solutions for different network layers are expected to further boost the market growth in this category.
Optical Networking and Communication Market Dynamics
Growing bandwidth requirements in the light of increasing internet users and rising data traffic are driving the growth of the optical networking and communication market, globally. Increasing dependence of economies and businesses on uninterrupted data connectivity is leading to a relentless demand for higher-bandwidth speed, further boosting the market growth. Optical networking is gaining traction across the globe due to the widespread consumer and commercial demand for faster internet services. Besides, the growing demand for high-speed and high-data-rate applications, increasing base of smartphone users, rising demand for data-intensive applications, and growing number of data centers are propelling the market growth, globally.
Moreover, with the widespread adoption of IoT and M2M technologies, robust network capacity has become imperative. Thus, the rise in the number of connected devices along with the adoption of data-intensive applications is encouraging the deployment of fiber-optic networks offering higher data transfer speed.
The players operating in the optical networking and communication market can leverage the 5G wireless technology to enhance networking. The 4G cellular technology is poised to be replaced by the 5G technology, which would require upgradation of infrastructure and integration of wireless and terrestrial technologies via sophisticated fiber-optic networks. 5G coverage in targeted areas would require deployment of a large amount of fiber to operate well, in order to meet capacity standards and other performance goals related to network diversity, availability, and coverage.
Thus, it can be concluded that the projected performance goals of 5G wireless technology would depend largely upon the availability of wireline fiber in the coming years. Fibers can facilitate 5G network densification with the required amount of bandwidth for the network to run at a sufficient capacity and speed and a low latency rate. Hence, network transition from 4G to 5G is expected to have a massive impact on the backhaul infrastructure, which, in turn, would create ample growth prospects for the players in the optical networking and communication market.
Optical Networking and Communication Market Competitive Landscape
The global optical networking and communication market is characterized by advancements in technologies, frequent introduction of new networking solutions, and increased price pressure on the players to compete in the market. The principal competitive factors applicable to the market include product functionality, price per bit, cost of product ownership, product innovation, flexibility of platforms, and manufacturing, lead-time, and support capabilities of the players.
Some of the key players operating in the optical networking and communication market are ADVA Optical Networking SE, Ciena Corporation, Cisco Systems Inc., Corning Incorporated, FiberHome Telecommunication Technologies Co. Ltd., Fujitsu Limited, Huawei Technology Co. Ltd., Infinera Corporation, Viavi Solutions Inc., Nokia Corporation, and ZTE Corporation.