Cloud Providers to Drive Optical Transport Market to $19 Billion in 2029, According to Dell'Oro Group

Data Center Interconnect to Grow at Twice the Rate of Overall Market

REDWOOD CITY, Calif., July 22, 2025 /PRNewswire/ -- According to a newly published forecast report by Dell'Oro Group, the trusted source for market information about the telecommunications, security, networks, and data center industries, the Optical Transport market is forecast to return to growth in 2025 after declining 9 percent in 2024. Following the steep decline caused by oversupply and poor macroeconomic conditions, the Optical Transport market is projected to grow at an average annual rate of 5 percent for the next five years, reaching $19 billion by 2029.

"We are anticipating that the time has come to interconnect all those new AI data centers being built," said Jimmy Yu, Vice President at Dell'Oro Group. "We are forecasting data center interconnect to grow at twice the rate of the overall market, driven by increased spending from cloud providers. The direct purchases of equipment for DCI will encompass ZR/ZR+ optics for IPoDWDM, optical line systems for transport, and DWDM systems for high-performance, long-distance terrestrial and subsea transmission," added Yu.

Additional highlights from the Optical Transport 5-Year July 2025 Forecast Report:

• While much of data center interconnect (DCI) is projected to shift to IPoDWDM in metro applications, DWDM Long Haul for DCI is expected to grow at a five-year compounded annual growth rate (CAGR) of 15 percent, driven by cloud providers.
• Revenues for ZR/ZR+ optical plugs used in routers and Ethernet switches (IPoDWDM) are forecast to grow at an average annual rate of 20 percent, contributing nearly 12 percent share of the Optical Transport market during the five-year forecast period.
• Disaggregating WDM systems into their subsystems is expected to remain a popular choice among cloud providers and will increasingly be adopted by communication service providers. Over the past decade, most growth was driven by demand for transponder units; in the next five years, it will be fueled by a greater demand for ZR/ZR+ optics and optical line systems (OLS).

About the Report
The Dell'Oro Group Optical Transport 5-Year Forecast Report offers a complete overview of the Optical Transport industry with tables covering manufacturers' revenue, average selling prices, unit shipments, and wavelength shipments (by speed up to 2.4 Tbps). The report tracks DWDM long haul, WDM metro, multiservice multiplexers, disaggregated WDM, DCI, and ZR/ZR+ optical plug.  To purchase this report, please contact us at dgsales@delloro.com.

About Dell'Oro Group
Dell'Oro Group is a market research firm that specializes in strategic competitive analysis in the telecommunications, security, enterprise networks, and data center infrastructure markets. Our firm provides in-depth quantitative data and qualitative analysis to facilitate critical, fact-based business decisions. For more information, contact Dell'Oro Group at +1.650.622.9400 or visit www.delloro.com.

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SOURCE Dell'Oro Group