Data Center Interconnect Market Analysis

Data Center Interconnect Market Overview

The Data Center Interconnect Market is projected to grow from USD 11.22 billion in 2024 to USD 29.5 billion by 2032, exhibiting a compound annual growth rate (CAGR) of 12.83% during the forecast period (2024 - 2032). Additionally, the market size for data center interconnect was valued at USD 9.78 billion in 2023.

The increase in migration toward the cloud across the globe, high demand for cloud infrastructure for flexibility, and increasing demand for higher bandwidth in line with the continued advancement in the latest technologies, including the Internet of Things (IoT), are the key market drivers enhancing the market growth.

Figure 1: Data Center Interconnect Market Size, 2023-2032 (USD Billion)

Source: Secondary Research, Primary Research, MRFR Database and Analyst Review

Data Center Interconnect Market Trends

The growing obese population is driving the market growth

Market CAGR for data center interconnect is driven as the major players are focusing on enhancing their product delivering and pursuing joint ventures to better cater to the changing requirements of the end-users and remain competitive. For instance, in November 2020, Ciena Corp. declared that NTT Communications Corp. elevated its DCI network by deploying a solitary-wave 800G line speed solution to adjust the growing demand for cloud and gaming services in line with the resumed rollout of 5G networks.

Additionally, an increase in the utilization of cloud storage drives market growth. The most practical and effective way to save data online nowadays is through cloud-based storage apps. In the world of cloud computing, there are numerous cloud-based solutions providers. Since this market is so big, every major tech company now has its data center facility, which helps to increase user revenue significantly. Eventually, the evolution to cloud-based solutions and the rise in organizational data traffic and big data analytics are also anticipated to flourish the growth of the data center interconnect market. There is a rising need for backup and storage as the data generated increases.

Connectivity has become incredibly important for any business user due to the massive development in Software-as-a-Service (SaaS), the popularity of work-from-home, cloud computing, and others. Enhancing the latency and reaction times between users and data centers is urgently needed. Traffic between data centers has drastically expanded due to hybrid IT systems. The significance of providing connectivity between data centers is increasing as a result. In a connected age, many-to-many connectivity possibilities are extremely valuable and are made possible by interconnection. Businesses can reduce latency owing to shorter distances. This enhances both cost and overall user experience, which drives market growth.

Moreover, the increasing commercialization of 5G services may further enhance the scope of data center interconnected solutions. They urgently required ultra-broadband, simplified, and intelligent DCI networks to cope with various data flows in the cloud era, which is further fueling innovation in the studied market. The launch of automatic planning, automatic configuration, and intelligent alarm analysis systems is shown in the market. Companies deliver intelligent data center services, which may assist in designing, building, and operating efficient facilities that use AI to decrease power usage, driving the data center interconnect market revenue.

Data Center Interconnect Market Segment Insights

Data Center Interconnect Type Insights

The global data center interconnect market segmentation, based on type, includes service, software, and hardware. The hardware segment dominated the market, accounting for 35% of market revenue (3.42 Billion). In developing economies, category growth is driven by rising volumes of big data, prompting cloud service providers to demand greater storage facilities. However, the software is the fastest-growing category as it helps balance and share resources when network traffic, and subsequently, the requirement for adequate bandwidth increases.

Figure 2: Data Center Interconnect Market, by Type, 2022 & 2032 (USD Billion)

Source: Primary Research, Secondary Research, MRFR Database and Analyst Review

Data Center Interconnect Application Insights

The global data center interconnect market segmentation, based on application, includes workload & data storage mobility, real-time disaster recovery & business continuity, and shared data & resources/server high-availability clusters. The real-time disaster recovery & business continuity category generated the most income (70.4%). This is due to increased resource efficiency and accessibility; IT can now move computing pools with data center interconnect due to recent advancements in virtualization technology. However, shared data & resources/server high-availability clusters are the fastest-growing due to the growing need to deploy data center interconnect for the shared data and resources/server high-availability clusters application.

Data Center Interconnect End-Users Insights

The global data center interconnect market segmentation, based on end-users, includes enterprises, CSPs, CNPs/ICPs, government, and others. The CSPs segment dominated the market, accounting for major market revenue. This is the increasing demand for an increased capacity for facilitating managed services. However, CNPs/ICPs are the fastest-growing category over the forecast period. Some of the major ICPs, including Facebook (Meta), Google, and Microsoft, are generating large volumes of internet traffic.

Data Center Interconnect Regional Insights

By region, the study provides market insights into North America, Europe, Asia-Pacific and the Rest of the World. The North American data center interconnect market will dominate this market, owing to the growing preference of individuals to adopt cloud-computing solutions. Technological betterment and growing investments in the R&D process of major companies will boost market growth in this region. Further, the US data center interconnect market held the largest market share, and the Canada data center interconnect market was the fastest growing market in the North American region.

Further, the major countries studied in the market report are The US, Canada, German, France, the UK, Italy, Spain, China, Japan, India, Australia, South Korea, and Brazil.

Figure 3: DATA CENTER INTERCONNECT MARKET SHARE BY REGION 2022 (USD Billion)

Source: Primary Research, Secondary Research, MRFR Database and Analyst Review

Europe's data center interconnect market accounts for the second-largest market share due to the increasing number of data centers and increased investment in cloud technologies. Further, the German data center interconnect market held the largest market share, and the UK data center interconnect market was the fastest-growing market in the European region.

The Asia-Pacific data center interconnect market is expected to grow at the fastest CAGR from 2023 to 2032. This is due to the growing usage of data in various industries. Many countries have set ambitious targets and launched products owing to technological advancements, which drive market growth in this region. Moreover, China’s data center interconnect market held the largest market share, and the Indian data center interconnect market was the fastest-growing market in the Asia-Pacific region.

Data Center Interconnect Key Market Players & Competitive Insights

Leading market players are investing heavily in research and development to expand their product lines, which will help the data center interconnect market grow even more. Market participants are also undertaking numerous strategic activities to expand their global footprint, with important market developments including new product launches, contractual agreements, mergers and acquisitions, higher investments, and collaboration with other organizations. To expand and survive in a more competitive and rising market climate, the data center interconnect industry must offer cost-effective items.

Manufacturing locally to minimize operational costs is one of the key business tactics manufacturers use in the global data center interconnect industry to benefit clients and increase the market sector. Major players in the data center interconnect market, including Ciena Corporation (US), Nokia Corporation (Finland), Huawei Technologies (China), Juniper Networks, Inc. (US), Infinera Corporation (US), and others, are attempting to increase market demand by investing in research and development operations.

Cisco Systems Inc integrates intent-based technologies across networking, security, collaboration, applications and cloud. The company offers switches, modules, wireless products, controllers, access points, routers, and interfaces. The company's products and technologies help the clients manage more users, devices and things connecting to their networks. Cisco serves various industries, including oil and gas, education, financial services, government, healthcare, mining, sports, media, entertainment, retail, utilities, and transportation. It markets solutions via a direct sales force and channel partners, including service providers, distributors, and resellers. In March 2021, Cisco Systems completed the acquisition of Acacia Communications, Inc. Acacia designs and manufactures high-speed, optical interconnect technologies that allow webscale firms, service delivers, and data center operators to meet the fast-growing consumer demand for data.

Ciena Corp provides communications networking solutions. The companies offer networking equipment, software and services that support the transport, switching, service delivery, video and data traffic on communications networks. Its products allow network operators to increase transmission speed, scale capacity, allocate traffic and adapt to user's changing service demands. Its solutions include networking platforms and converged packet optical routing and switching portfolios. The company serves telecommunications service providers, government, electric utilities, enterprises, research and education institutions, submarine network operators and cable operators. In November 2020, Ciena Corporation signed a contract with NTT Communications Corporation, the ICT solutions and international communications business within the NTT Group, that deployed a single-wave 800G line speed solution for Data Center Interconnect (DCI) offered by the Ciena Corporation.

Key Companies in the Data Center Interconnect market include

• Ciena Corporation (US)


• Nokia Corporation (Finland)


• Huawei Technologies (China)


• Juniper Networks, Inc. (US)


• Infinera Corporation (US),


• ADVA Optical Networking SE (Germany)


• Cisco Systems (US)


• Extreme Networks, Inc. (US)


• Fujitsu Ltd (Japan)


• Colt Technology Services Group Limited (UK)


• Eqiunix (US)

Data Center Interconnect Industry Developments

Nokia announced in November 2022 that it will introduce 400 gigabit-enabled interfaces on its 7250 IXR (interconnect router) systems to Africa Data Centers, which happen to be the largest provider of interconnected, carrier and cloud-neutral data center facilities in the continent. Cassava Technologies’ business, Africa Data Centres, a pan-African technology company, will be able to provide low-cost, high-capacity interconnection services for clients across many African countries.

Cologix, one of North America’s top network-neutral interconnections and hyperscale edge data center providers, has increased its strategic alliance with Console Connect by PCCW Global via deploying Console Connect Software-Defined Interconnection platform at its TOR1 data center in Toronto in June 2022. Cologix now gives Canadian customers access to extra quick and reliable digital edge links through Console Connect that allow them to communicate with their customers or partners globally without interruption.

Equinix, Inc., the digital infrastructure company and VMware, Inc., the cloud computing company, announced an extended partnership agreement aimed at delivering innovative digital infrastructure as well as multi-cloud services during November 2022. The joint effort between the two businesses saw them pioneer VMware Cloud on Equinix Metal: a new distributed cloud service designed for enterprise applications providing a higher performance level than secure, cost-effective clouds do. This service combines Equinix’s global interconnected Bare Metal-as-a-Service offering with managed-and-supported cloud infrastructure delivered by VMware. It also extends customers’ cloud environments to dispersed metro areas where they can meet business-critical performance requirements at the edge without compromising enterprise workloads’ integrity.

In September 2021, the Finnish Nokia Corporation and Dutch Infradata partnered to develop an IP/optical integrated data center interconnect solution for NorthC Datacenters (NorthC), the largest regional data center provider in the Netherlands. Ten NorthC data centers will be interconnected as a single virtual data center under the proposal. Such high-speed Region Connect Ring now enables fast, scalable and reliable data center interconnection and cloud connectivity by NorthC to its clients.

Cisco Systems (US) acquired Acacia Communications, Inc. (US) in March 2021. With this acquisition of Acacia Communications, Inc., Cisco can use high-speed optical interconnects manufactured by that company to cater to the growing needs of webscale companies, service providers and data center operators.

Under a contract signed with NTT Communications Corporation (NTT Group), Ciena Corporation (US) launched a single-wave 800G line speed option for Data Center Interconnect provided by Ciena in November 2020.

Data Center Interconnect Market Segmentation

Data Center Interconnect Type Outlook

• Service


• 
  

  Software

  
  


• 
  

  Hardware

  
  

Data Center Interconnect Application Outlook

• Workload & Data Storage Mobility


• 
  

  Real-Time Disaster Recovery & Business Continuity

  
  


• 
  

  Shared Data & Resources/Server High-Availability Clusters

  
  

Data Center Interconnect End-Users Outlook

• Enterprise


• 
  

  CSPs

  
  


• 
  

  CNPs/ICPs

  
  


• 
  

  Government

  
  


• 
  

  Others

  
  

Data Center Interconnect Regional Outlook