Optical Communication and Networking Equipment Market Outlook - 2027
The global optical communication and networking equipment market size was valued at $15.72 billion in 2019, and is expected to reach $26.83 billion by 2027, growing at a CAGR of 7.2% from 2020 to 2027.
Optical communication and networking equipment is a device that utilizes light which is signals encoded to transmit information in various types of telecommunications network. It includes wide-area networks (WAN) or limited range local-area networks (LAN), which cross regional and metropolitan areas as well as long-distance international, national, and transoceanic networks. The optical components in optical communication and networking includes optical amplifiers, transceivers, termination devices, tunable filters, and add-drop multiplexers.
Global optical communication and networking equipment market growth has been significantly impacted by the covid-19 outbreak. The production facilities of electronics and semiconductors have been halted, owing to the slowdown and unavailability of the workforce across the globe. The market growth has experienced a dip in 2020, due to the disruption in global supply chains cause by the pandemic.
However, the market is expected to witness a recovery in its growth rate in the coming years, owing to the growing focus of organizations to fulfill upsurge in demand for telecommunication equipment driven by rapid acceleration in 5G deployment across the globe. In addition, pandemic has boosted the number of fiber optic broadband lines around the globe due to more data traffic as well as new broadband demands with people staying at home.
For instance, according to IDATE, a Media company and the FTTH Council Europe, a non-profit organization, high speed fiber will pass 202 million houses in the European Union and Britain by 2026, up from 88.1 million in 2019. This is mainly driven by the acceleration in demand for faster internet services due to COVID-19 pandemic.
Segment Overview
The global optical communication and networking equipment market is segmented on the basis of component, technology, industry vertical, and region. On the basis of component, the market is divided into optical fiber, transceiver, switch, and others. By technology, the market is classified into SONET, WDM, and Fiber Channel. On the basis of industry vertical, it is divided into IT & telecom, BFSI, military & defense, oil & gas, and medical & healthcare. Region wise, the optical communication and networking equipment market is analyzed across North America, Europe, Asia-Pacific, and LAMEA.
By Component
Optical Fiber segment will grow at a highest CAGR of 8.1% during 2020 - 2027
Top Impacting Factors
Factors such as surge in data traffic owing to the increased internet usage, increasing number of data centers, and rise in adoption of cloud based as well as virtualization services fuels growth of the market. Also, increase in demand for advanced network equipment due to COVID-19 pandemic is projected to drive the growth of the market during the forecast period.
However, requirement of huge initial investments is anticipated to restrain the market growth. On the contrary, the acceleration in deployment of VOIP, LTE, and 5G networks is expected to provide lucrative opportunities for the market growth. In addition, rise in adoption of AI and IoT is anticipated to be opportunistic for the growth of the optical communication and networking equipment industry during the forecast period.
By Technology
WDM segment will dominate the market with a highest CAGR of 7.7% during 2020 - 2027
Increased Internet Usage
The amount of information traveling across the internet is experiencing continuous growth as more number of devices are connected as well as new applications are being developed. For instance, this growth is demonstrated in the Cisco Visual Networking Index, which shows that Internet Protocol (IP) traffic across the globe is increasing rapidly and the mobile data traffic is estimated to grow exponentially and reach about 30.6 exabytes per month in 2020. In addition to this, a growing number of smartphone users is projected to boost the internet usage.
Furthermore, as the internet traffic increased exponentially, with more number of diversified services and applications, the capacity of optical networks has expanded accordingly. Fiber optics offer increased bandwidth to its users; hence, there is upsurge in demand for optical communication and networking equipment. This factor primarily drives the growth of the optical communication and networking equipment market.
By Industry Vertical
IT and Telecom segment holds dominant position throughout the forecast period
Increasing Number of Data Centers
The modern data center networks with their vast bandwidth and scale requirements are adopting optical communication and networking equipment. Only the optical communication technology has demonstrated capacities of 10 GB/s, 40 GB/s, and higher, over large distances. Therefore, increasing number of data centers across the globe depend on interconnects for delivering critical communications connectivity among numerous servers, computation, and memory resources. However, factors such as explosive growth of Internet Protocol (IP) traffic and growth of cloud computing is driving number of data centers around the globe. Therefore, increase in number of data center significantly fuels the growth of the optical communication and networking equipment market.
Competitive Analysis
The company profiles of optical communication and networking equipment market players which occupy major Optical Communication and Networking Equipment market share are included in this report are Arista Networks, Inc., Cisco Systems, Inc., Ericsson, Fujitsu Optical Components Limited, Huawei Technologies Co., Ltd., Juniper Networks, Inc., Mitsubishi Electric, NEC Corporation, Nokia Corporation, and ZTE Corporation. The global optical communication and networking equipment industry key market players adopt various strategies such as product launch, product development, collaboration, partnership, and agreements to influence the market growth.
By Region
Europe region would exhibit the highest CAGR of 8.9% during 2020 - 2027
COVID-19 Analysis
The optical communication and networking equipment market has been significantly impacted by the COVID-19 outbreak. At the start of the outbreak, the main impact faced by many manufacturers was supply problems, owing to halted production. Attributed to lockdown measures and halt of non-essential businesses, the demand for residential, enterprise, & industrial use of building automation system has been decreased. Consequently, the manufacturing & supply of optical communication and networking equipment system is returning to normal levels.
Attributed to the ongoing COVID-19 crises, the construction market is expected to witness abrupt downturn this year. However, a slow recovery is anticipated to begin next year. It is also estimated that the construction market will face a lot of challenges leading to the COVID-19 crisis with stagnation trends in many countries. Moreover, the ongoing crisis is expected to have a huge negative impact on the construction industry across the globe. However, Europe is estimated to witness positive growth rates next year and normalization in 2022.
Key Benefits for Stakeholders
- This study comprises analytical depiction of the global optical communication and networking equipment market size along with the current global optical communication and networking equipment market trends and future estimations to depict imminent investment pockets.
- The overall optical communication and networking equipment market analysis is determined to understand the profitable trends to gain a stronger foothold.
- The report presents information related to key drivers, restraints, and opportunities with a detailed impact analysis.
- The optical communication and networking equipment market forecast is quantitatively analyzed from 2019 to 2027 to benchmark the financial competency.
- Porter’s five forces analysis illustrates the potency of the buyers and suppliers in the market.
Optical Communication and Networking Equipment Market Report Highlights
| Aspects | Details |
 By Component |
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 By Technology |
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 By Industry Vertical |
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 By Region |
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 Key Market Players | Nokia Corporation, Mitsubishi Electric Corporation, Telefonaktiebolaget LM Ericsson, Arista Networks, Inc., NEC Corporation, Huawei Technologies Co., Ltd., ZTE Corporation, Juniper Networks, Inc., Fujitsu Optical Components Limited, Cisco System Inc. |
Analyst Review
The optical communication and networking equipment market is going through enormous transformation and growth. Optical communication and networking equipment are necessary for communication across the internet. The internet traffic is growing exponentially, along with the more number of diversified applications and services. This has led to the expanded capacity of optical networks. In addition, the increase in demand for reliable and faster internet connectivity is boosting growth in adoption of optical communication and networking strategies by market players.
In addition, optical communication and networking equipment is experiencing advanced innovations as well as introduction of lucrative products to meet demand for 4G and 5G networks. For instance, in October 2019, Nokia, the Finnish telecom equipment vendor launched a new set of packet-optical transport switches to allow the mobile network operators to effectively deploy 5G Cloud RAN architecture. Moreover, there is rise in demand for robust network infrastructure across the medical & healthcare sector.
In modern times patients’ information needed to move safely and quickly from mobile devices to be stored as data in electronic health records (EHRs). Hence, there is need for complex images to be stored, transmitted, and easily accessed to make diagnoses. A high-speed fiber optic network along with the advanced optical communication and networking equipment ensures that medical institutions can transmit health care data securely and efficiently. This factor significantly fuels the growth of the optical communication and networking equipment in the medical & healthcare industry.
Furthermore, continuous expansion of infrastructure for fiber optic networks is observed across the globe due to the need for higher capacity fiber optic networks for both mobile and fixed telephony services. For instance, in June, 2019, the first phase of CenturyLink’s fiber network expansion was completed in the U.S. and it reaches more than 70 cities including many of the country’s most populated metropolitan areas. Its fiber network in the U.S. traverses more than 3.5 million miles. Such expansion of optical fiber networks significantly fuels the growth of the optical communication and networking equipment market.
The optical communication and networking equipment market is competitive and comprises a number of regional and global vendors competing based on factors such as cost of solutions & services, reliability, efficiency of the product, and support services. Owing to the competition, vendors operating in the market are offering advanced and higher capacity optical communication and networking equipment solutions to improve the marketing strategies of enterprises.
On the other hand, the growing investment trend of companies across the industries such as IT & telecom, BFSI, healthcare, and military & defense in optical communication and networking fuels the market growth. In addition, key players are heavily investing in R&D activities to develop effective optical communication and networking equipment technologies and services offerings, which is opportunistic for the market.
The Optical Communication and Networking Equipment Market is estimated to grow at a CAGR of 7.2% from 2020 to 2027.
The Optical Communication and Networking Equipment Market is projected to reach $26.83 billion by 2027.
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Fiber optics offer increased bandwidth to its users; hence, there is upsurge in demand for optical communication and networking equipment drives the growth of Optical Communication and Networking Equipment Market.
The key players profiled in the report include Arista Networks, Inc., Cisco Systems, Inc., Ericsson, Fujitsu Optical Components Limited, Huawei Technologies Co., Ltd., Juniper Networks, Inc., Mitsubishi Electric, NEC Corporation, Nokia Corporation, and ZTE Corporation.
On the basis of top growing big corporations, we select top 10 players.
The Optical Communication and Networking Equipment Market is segmented on the basis of component, technology, industry vertical, and region.
The key growth strategies of Optical Communication and Networking Equipment market players include product launch, product development, collaboration, partnership, and agreements to influence the market growth.
Transceiver segment holds a dominant position throughout the forecast period.
WDM segment will grow at a highest CAGR of 7.7% during 2020 2027.
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