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Dell’Oro Group published an update to the Microwave Transmission & Mobile Backhaul market 5-Year Forecast report in July 2021.

 

xHaul Systems Equipment in Demand

xHaul, a term referring to fronthaul, midhaul, and backhaul as well as transport and packet processing, is projected to grow through the forecast period, reaching nearly $9 billion by 2025. This multi-year growth is expected to be driven by 5G. In the xHaul forecast, we include both Mobile Transport (fronthaul and backhaul) and Routers & Switches. As would be expected, we believe the highest growth in xHaul will be from growing installations of Routers & Switches as more Layer 2 and 3 functions are required in the mobile network.

The Mobile Transport Layer Returns to Growth

The end of the 4G deployment ramp brought a slowdown in both mobile backhaul and fronthaul transport equipment sales. However, this trend seems to be in reverse as 5G rolls out globally. A small glimpse of this reversal, though restrained by the COVID-19 pandemic, was visible in 2020 when the Mobile Transport equipment market increased slightly. We believe the growth in 2020 was just the beginning, and predict that the Mobile Transport market, consisting of mobile backhaul and fronthaul, will grow for many more years and that the cumulative revenue for the next five years will approach $27 billion, a solid increase over the previous five-year period.

Microwave Transmission Important for 5G Backhaul

While much of the growth will be with fiber backhaul systems, we expect wireless backhaul systems such as Microwave Transmission equipment will be a critical component in an operator’s successful rollout of 5G for two simple reasons: fiber is not everywhere and time to market is critical to success.

Therefore, we anticipate that the demand for Microwave Transmission equipment will increase for a number of years and that much of the growth will be from rising sales of E-band radios. We forecast E-Band radio transceiver shipments to grow at a compounded annual growth rate (CAGR) of nearly 30 percent.

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About the Report

The Dell’Oro Group Microwave Transmission & Mobile Backhaul 5-Year Forecast Report offers complete, in-depth coverage with tables covering manufacturers’ revenue, radio transceivers, and average selling prices. The report tracks mobile backhaul by cell type (macro and small cell) and technology (wireless and fiber/copper). The microwave transmission tables forecast point-to-point TDM, Packet and Hybrid Microwave as well as full indoor and full outdoor unit configurations. To purchase this report, please contact us at dgsales@delloro.com

 Dell'Oro Group Microwave Transmission & Mobile Backhaul 5-Year Forecast Report July 2021
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Power-over-Ethernet ports are forecast to compose nearly 50% of campus switch ports by 2025

Since issuing our January 2021 five-year forecast report, we have published actual shipment and revenue data for 2020 and the first quarter of 2021. (Note that vendors did not report full-year 2020 financial results until after our January 2021 report was published.) 2020 revenue came in below the revenue forecast published in our January 2021 report. Nonetheless, we have raised our 2021 forecast from 2% growth to 3% growth.

Our more optimistic 2021 outlook is prompted by strong market performance that has so far exceeded our expectations. (1Q21 revenue was up 4% Y/Y in contrast with our flat-market forecast.) Although some of the growth in 1Q21 might have been reflective of pent-up demand, it came mostly from the public sector, while the private sector has not recovered yet, paving the way for more growth in the remainder of the year and potentially next year.  Funding around the world lifted public sector performance in 1Q21 and is expected to continue to stimulate market growth for many quarters – and possibly years – to come.

Last but not least, projected growth in 2021 will be propelled by ongoing improved macroeconomic outlooks. Recent GDP reports indicate that economists at the world’s leading banks have raised their growth projections for both 2021 and 2022.

Looking beyond, we expect the market to continue to grow in 2022, exceeding its 2019 pre-pandemic revenue level. In 2022, we expect growth to accelerate from 2021, due to pent-up demand from the verticals most greatly affected by the pandemic.

Despite the potential downside impact from COVID-19, such as work from home and further cannibalization from WLAN, we expect the pandemic to bring some upside impact, including:

  • Accelerated pace of digital transformation initiatives. Although the majority of IoT devices will be wireless, some devices – such as security cameras, industrial lighting, and some sensors – are expected to remain on wired Ethernet.
  • Greater share of higher-priced PoE devices. We expect IoT devices to drive an increased share of higher-priced PoE ports. We currently project PoE ports to compose nearly half of all ports by 2025. We expect this trend to help boost market average selling prices (ASPs).
  • Accelerated pace of the campus switch refresh cycle. We expect the adoption of digital transformation to accelerate the pace of the campus switch refresh cycle. In order to enable digital transformation, the network must undergo numerous changes. Automation, security, visibility, and analytics/intelligence are added functionalities that IT managers need for the new digital era.

In our campus switch five-year forecast report, we explore the methodology used to quantify the pandemic’s upside and downside risks. Additionally, our interviews with end-users, system integrators, and VARs revealed an increased interest in Network as a Service (NaaS) during the pandemic. We expect this interest will persist after the pandemic ends.

To access the full report for revenue, units, pricing, and relevant segmentation, including regions and vertical markets, please contact us at dgsales@delloro.com

About the Report

The Dell’Oro Group Ethernet Switch – Campus Five-Year Forecast Report offers a complete overview of Ethernet switches built and optimized for deployment outside the data center to connect users and things to Local Area Networks. The report provides tables covering manufacturers’ revenue, average selling prices, and port/unit shipments by Ethernet and Gigabit speed (Fast and 2.5, 5.0, 25, 10, 40, 50, and 100 Gigabit Ethernet). Regional breakouts and Power Over Ethernet (PoE) are also included.

 Dell'Oro Group Ethernet Switch Campus market 5-Year Forecast July 2021
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800 Gbps adoption rate expected to be faster than 400 Gbps, composing more than 25% of data center switch ports by 2025

Since the onset of COVID-19, we have predicted that the data center switch market will be for the most part resilient to the effects of the pandemic and that it will quickly recover from its low, single-digit revenue decline in 2020. We continue to believe that the Ethernet switch data center market will return to growth in 2021 and be able to exceed its 2019 pre-pandemic revenue level.

Following are key takeaways from the July 2021 Five-Year Ethernet Switch Data Center forecast:

    • Our interviews with end-users and system and component vendors suggest that the pandemic has amplified the importance of the network and accelerated multi-year digital transformation projects. These trends are expected to bring major changes to data center networks and potentially generate additional market revenue.
    • Despite our optimism, our interviews with major vendors revealed that a number of them are already operating at full manufacturing capacity and that supply challenges will continue through the remainder of the year with a potentially more pronounced impact on market performance and the pricing environment. If this is true, our forecast may prove to be too high, as it doesn’t currently take into consideration the impact of these various supply issues.
    • Through our latest interviews with the large Cloud service providers (SPs), we have learned of a number of changes that may impact network architectures when they migrate to next-generation speeds. These changes will be driven by a limited power budget and new AI/ML applications, which may require different network topologies. These hyperscalers will make different choices in terms of network chips, switch radix, number of network tiers, and –ultimately – network speeds. We expect this diversity to increase when Cloud SPs build next-generation networks, as some will focus more on latency improvements while others will focus on power. Ultimately, however, all SPs will focus on cost reduction. Additional discussion about these possible changes and their associated effects may be found in our forecast report.
    • Optics have always played an important role in enabling speed migration on data center switches. With the transition to 400 Gbps and beyond, however, the role played by optics will become even more crucial for a number of reasons. First, because of their increased price, optics for 400 Gbps speeds and higher are expected to compose about 60% to 70% of network spending (compared with less than 50% for speeds lower than 400 Gbps). For this reason, some switch vendors are planning to use the optics opportunity to capture a higher portion of network spending. Second, optics may displace some dense wavelength division multiplexing (DWDM) transport systems for certain Data Center Interconnect (DCI) use cases. Last, but not least, while pluggable (as opposed to embedded) optics are currently the form factor of choice, they may potentially exhibit some thermal and density issues as we approach speeds of 1.6 Tbps and higher. All of these possible changes in optics and their corresponding impact on the data center switch market are addressed in greater detail in our report.

    • Data Center Switch market forecast - 400 Gbps vs 800 Gpbs Port Shipments - DellOroGroup.JPGWe predict that 800 Gbps adoption will be quick, surpassing 400 Gbps ports in 2024 (Figure). 800 Gbps deployments will be propelled by the availability of 100 Gbps SerDes and will not require 800 GE MAC. As a reminder, our forecast reflects port-switch capacity, regardless of how the port is configured. We expect early 800 Gbps ports to be used in breakout mode either as 8×100 Gbps or as 2×400 Gbps. (Breakout applications support many use cases, such as aggregation, shuffle, better fault tolerance, and bigger Radix.) The anticipated rapid adoption of 800 Gbps will be propelled by: 1) availability of 800 Gbps optics with a significantly lower cost per bit than two discrete 400 Gbps optics; and 2) lower cost per bit at a system level, as 800 Gbps will allow consuming 25.6 Tbps chips in a 1U form factor with 32 ports of 800 Gbps. These systems will have a better cost per bit than their equivalent 400 Gbps (which requires 2 U chassis to fit 64 ports). Since economics drive adoption, we believe that 800 Gbps will be more rapidly adopted than 400 Gbps.

To access the full report for details about revenue, units, pricing, speeds, regions, market segments, etc., please contact us at dgsales@delloro.com

 

About the Report

The Dell’Oro Group Ethernet Switch – Data Center Five Year Forecast Report provides a comprehensive overview of market trends, including tables covering manufacturers’ revenue, port shipments, and average-selling prices for modular, fixed, and managed and unmanaged by port speed. We report on 1000 Mbps and the following Gbps port speeds: 10, 25, 40, 50, 100, 200, 400, and 800. We also provide forecasts by region and market segment, including Top-4 U.S. Cloud SPs, Top-3 Chinese Cloud SPs, Telco SPs, Rest of Cloud, Large Enterprises, and Rest of Enterprises.

 July 2021 5-Year Forecast DC Switch Market
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Dell’Oro Group published an update to the Optical Transport 5-Year Forecast report in July 2021.

 

Optical Transport Market Forecasted to Grow Through 2025

The Optical Transport market, largely driven by WDM equipment, is forecasted to increase in size annually for the next five years, reaching nearly $18 billion. This forecast update is unchanged from our previous forecast. That said, we did lower our outlook for WDM Metro since the coherent 400 Gbps ZR (400ZR) pluggable optics are now available and interest in using them in an IPoDWDM architecture seems high.

Coherent ZR Optical Pluggable Emerging

We are predicting coherent ZR optical pluggable demand to reach a material amount in 2022, starting with 400ZR. We project this pluggable optic will be in high demand among Internet content providers (ICPs), driving a very high percentage growth rate for the next few years. Following the success of 400ZR, we anticipate 800ZR will enter the market a few years later. We forecast the ZR pluggable optics market will surpass $500 million in annual sales by 2025.

1+ Tbps to Follow 800 Gbps

Demand for 800 Gbps-capable line cards, first introduced in early 2020, has rapidly increased, demonstrating a strong rate of adoption as well as the markets continued desire for higher performance DWDM transponder cards. As such, we believe the market is already preparing to release the next single carrier wavelength speed.

We predict the next wavelength speed following 800 Gbps will be 1200 Gbps (1.2 Tbps). Based on the timing of past coherent DSP introductions, we anticipate 1.2 Tbps-capable line cards could enter the market before the end of 2023.

We forecast that by 2025 about one-third of all coherent wavelength shipments will be from a line card capable of transmitting a signal at a speed of 800 Gbps or higher.

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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, wavelength shipments (by speed up to 1.2 Tbps). The report tracks DWDM long haul, WDM metro, multiservice multiplexers (SONET/SDH), optical switch, optical packet platforms, data center interconnect (metro and long haul), and disaggregated WDM. Click here to learn more about the report or contact us at dgsales@delloro.com.

 Dell'Oro Group Optical Transport 5-Year Forecast Report July 2021
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Dell’Oro Group published an update to the Mobile Core Network 5-Year Forecast report in July 2021

We project the Mobile Core Network (MCN) to have an overall revenue compound annual growth rate (CAGR) of 3% from 2020 to 2025. The report also estimates the 5G portion of the MCN market to have a 33% CAGR. Some key highlights from our recently published Mobile Core Network (MCN) July 2021 5-Year Forecast Report are as follows:

  • The cumulative investment is expected to be over $50 B from 2021 to 2025, with regional shares in the range for North America – 18 % to 23 %; Europe, Middle East, and Africa – 30 % to 35 %; Asia Pacific – 40 % to 45 %; and Caribbean and Latin America – 5 % to 10 %.
  • By the year 2025, MCN functions associated with 5G are expected to represent over 70 % of the revenue mix between 4G and 5G MCN functions.
  • 5G Core builds by the three incumbent service providers for 5G Standalone (5G SA) networks in China are continuing to exceed our expectations. In addition, in 2021, the new Chinese communications service provider, China Broadcasting Network will be beginning construction of its 5G SA network.
  • Deployments of more 5G SA networks are expected in the latter half of 2021 in Australia, Germany, Japan, South Korea, Switzerland, and the United Kingdom. AT&T and Verizon should begin in earnest in 2022 and 2023 with their 5G SA networks. Geographic coverage is minimal at launch and is expected to grow throughout the forecast period.

 

About the Report

Dell’Oro Group’s Mobile Core Network 5-Year Forecast Report offers a complete overview of the market for Wireless Packet Core, IMS Core, policy, and subscriber management with historical data, where applicable, to the present. The report provides a comprehensive overview of market trends by network function implementation (Non-NFV and NFV), covering revenue, licenses, average selling price, and regional forecasts for various network functions. Click here to learn more about the report or contact us dgsales@delloro.com for the full report.