2018 Optical DCI Reach Segmentation Update
In 2016, ACG Research published “Trends and Directions in Data Center Interconnect: A Survey of Optical and Packet Mode Networking Practices.” One area of the report that I have been most frequently contacted about is the optical reach analysis. The Optical DCI segment represents over 17% of the global optical networking market and is one of the fastest growing with 24% y-y growth in the first three quarters of 2017. Vendors and service providers continue to look at ways to address this market based at least in part on the optical distance or reach between data centers. By knowing the optical reach requirements, vendors and service providers can match the most appropriate optical transmission technology to their networking needs. Vendors can also make decisions regarding technology investments for the future.
Along with our vendor partners, we decided that after two years it was a good time to re-execute the optical reach portion of our survey. As in 2016, we obtained 45 responses from a mix of service provider types: network service providers, cloud service providers, internet content providers and inter-eXchange/carrier-neutral providers. We also obtained a balanced mix of responses from the four macro geographies: North America, Latin America, Asia-Pacific and Europe-Middle-East-Africa. Although we wanted to execute a similar analysis to 2016, we also desired some additional granularity. We thus went from six reach categories in 2016 to eight in 2018. The 2018 results are listed in Figure 1.
One obvious question is how do these results compare to those executed in 2016? Looking at the 2016 results in Figure 2, the distribution is bimodal and initially looks quite different from the normal distribution seen in the 2018 results. However, the primary reason for the variation is the inclusion of more granularity in 2018 (Figure 1). In 2016, we had a single category for > 600km reach. In 2018, we subdivided this long-haul segment into three: 601 to 2,000km, 2,001 to 10,000km and greater-than 10,000km. By having three categories, we dilute the value of the broader >600km segment.
If we recategorize the 2016 and 2018 survey results into a set of unified reach categories, we see a more consistent pattern emerge. There are, however, some important differences between the two surveys. Although still sizable, the 2018 survey results demonstrate a smaller sub-80km segment, going from 47.1% in 2018 to a projected 40.9% in 2021. This contrasts with the 2016 survey results where the sub-80km segment was significantly larger with 58.8% and 57.7% in 2016 and 2018, respectively. Utilizing linear interpolation to extrapolate the 2016 results to cover the years 2018 to 2021 yields a 10.9% and 15.8% reduction in the sub-80km segment over the respective years. The 81–150km and 151–600km segments are the main beneficiaries of the smaller sub-80km segment in the 2018 survey. The 81–150km market goes from 15.8% to 20.8% in 2018 and 2021, respectively, while the 151–600km market goes from 15.1% to 17.4%, respectively. These results contrast with the 2016 survey where the market segmentation was roughly flat across 2016 and 2019 going from 10.3% to 11.2% for 81–150km and 13.4% to 11.8% for the 151–600km segment, respectively.
Optical DCI remains a large and growing segment of the global optical networking market. As vendors and service providers attempt to match optical technology investments and deployments to their optical DCI use cases, it is imperative to understand the portion of the Optical DCI market that each technology can address. By publishing our latest Optical DCI reach results, we seek to add additional quantitative analysis to the process.
I would be happy to discuss these results and other Intelligent Networking topics at #OFC2018 in San Diego, California March 11-15, 2018.