Data Center Interconnect Market Trends, Industry & Size 2031

Report Description

Data Center Interconnect Market Outlook 2031

The global data center interconnect market size was around USD 6.13 billion in 2022 and is anticipated to reach USD 19.78 billion by 2031, expanding at a CAGR of 13.9% during the forecast period, 2023-2031. The market growth is attributed to the growing need to enhance data connectivity across devices and applications among business enterprises.

Data center interconnect or DCI is a technology platform that connects two or more data centers together over short, medium, or longer distances through high-speed packet-optical connectivity. Data centers include several core components such as computing and storage resources for data, applications, and content, which play a crucial role in smooth access to data.

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DCI also allows users to get reliable access to cloud-based data as well. Data centers are normally required to communicate with each other consistently in order to share data and content as well as facilitate backups for redundant data.

DCI technology aids in the smooth transfer of critical digital assets across towns to ultra-long distances such as trans-Pacific or trans-Atlantic oceanic links and everything in between.

The data is transferred across simple point-to-point networks, ROADM-based networks, or through the open-line systems that support the transport of interfaces that are sourced from multiple vendors.

There are several options for DCI connectivity. Selection of the most suitable option depends on multiple factors such as the location of the data center, the distance between data centers, security, bandwidth & availability requirements, and the capabilities of local service providers.

Data centers are constructed from mini to mega-scale, based on the requirements and available capital investments. Mega data centers are built to ensure the highest storage capacity, computing abilities, and bandwidth to transfer large amounts of data.

Enterprises mostly use data center interconnect solutions with a primary focus on supporting business connectivity and disaster recovery. However, several enterprises started expanding the applications of DCI to support their day-to-day operations. Data center services are used by internet service providers, cloud computing platforms, enterprises, and telecom companies.

The data center facilities are more secure and certified for their high compliance with the industry’s top certification programs. DCI links enable stronger encryption of traffic, which makes sharing information more secure.

DCI also allows enterprises to apply quality of service (QoS) and other necessary policies to ensure high-quality performance. DCI efficiently supports multiple connection types, which provides organizations with flexibility in deciding how to allocate workloads.

COVID-19 Impact on Data Center Interconnect Market

The COVID-19 pandemic positively impacted the global data center interconnect market as business clients had to invest more on digitization to stay operational during lockdown restrictions. Enterprises rely on data center services to keep business operations online and get easy access to types of data required for their specific needs.

For data centers to constantly communicate, having DCI technology is a must, which has opened up tremendous long-term growth opportunities for the global data center interconnect market.

The expansion of data center infrastructure is carried out by the major players in the global data center interconnect market, to support the growing needs of the market. Digital solutions are used by various companies in day-to-day operations to carry out essential business activities.

The rapid migration to cloud-based solutions across industries and the rising importance of OTT content for business applications during the pandemic boosted the global data center interconnect market.

Data Center Interconnect Market Dynamics

The research report presents a complete overview by providing detailed information about the current market trends, existing drivers, growth opportunities and potentials, and emerging challenges.

The global data center interconnect market report has up-to-date insights about market dynamics and market scenarios that can shape the overall market performance and output during the forecast period, 2022 to 2030.

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Major Trends

Increasing deployment of 5G network technology

The 5G technology is emerging as the next big market trend for various industries globally. The rising 5G adaptation in data center platforms is expected to significantly increase the effective service for data operation for businesses. The rising use of the 5G network by business clients and the rising global internet traffic to support cloud migration become vital aspects in facilitating market growth.

The 5G network offers fast, huge, and denser streams of data, which is expected to facilitate the optimization of data center capacity. The enhanced 5G technology is anticipated to smoothen up every interaction and device, making data storage, transferring, and proceeding fairly easy. This way, the players in the global data center interconnect market are likely to maximize their revenue generation with the deployment of 5G network technology.

Key Drivers

Rising need for a large volume of data generation among business enterprises

The use of data is rapidly increasing every day among business enterprises to gain a competitive edge in the global market. As per the estimation of Huawei Technologies Co., one of the key players in the global data center interconnect market, worldwide data production is estimated to reach 180 Zetta Byte by 2025.

Business organizations are increasingly spending to acquire highly advanced technology and focusing more on accessing intelligent data center service. The rising demand for strengthening digital presence among businesses presents a key factor driving the market.

Increasing migration to cloud-based services

Numerous businesses are hosting their apps on cloud-based platforms, which is aiding them to save costs while efficiently serving their customers 24/7. The increased use of the cloud-based solution is expected to further drive the global data center to interconnect market growth in the coming years.

The massive expansion in the use of cloud-based services among industries is largely influenced by various efficient facilities provided by cloud platforms in terms of hosting data center networks. Conventional networks such as the shared hosting model were inadequate to handle the increasing load of users and app complexities required by present business organizations.

Existing Restraints

High initial costs of establishing data centers

The building and maintenance of a data center require high investment and it remains a major challenge for data center operators, especially for small and medium enterprises. The initial planning of the data center requires special attention given to several aspects.

These aspects include permits and approvals, engineering, power resources and systems, generators with enclosures, lighting system of the data center, protection for the lighting, fire safety measures, and HVAC. The investment required for arranging all these aspects can quickly be added to the overall cost to the service providers, which is anticipated to hamper the market expansion.

Emerging Opportunities

Rising demands for disaster recovery and business continuity

Unplanned incidents such as floods, earthquakes, fire outages, security attacks, and many other disasters act as major threats to data center service providers. For global data center users, disaster recovery is one of the major concerns and the use of DCI services can easily allow users to recover the loss of data caused by such calamities. Data center interconnect solutions facilities are generally located far from users’ sites, making them less prone to such mishaps.

DCI facilities can provide a perfect backup and recovery alternative for global data center users. These data centers can be controlled remotely, which makes them reliable if any disaster happens at the business premise.

The demand for data center interconnect solutions is expected to rise to efficiently provide robust business continuity and disaster recovery backup alternative to enterprises, enabling the market to grow further.

Scope of Data Center Interconnect Market Report

The global data center interconnect market research report includes an assessment of the market trends, segments, and regional markets. Overview and dynamics have also been included in the report.

Data Center Interconnect Market Segment Insights

Application Segment Analysis

On the basis of application, the global data center interconnect market is segmented into data storage mobility, business continuity, workload mobility, shared data cluster, real-time disaster recovery, and others.

The shared data cluster segment accounted for a key market share in 2021 and is projected to expand at a high CAGR during the forecast period, owing to the increasing demand for deploying data center interconnects for the shared data cluster. Shared data cluster is in high demand, as it provides security of workloads to globally distributed data centers.

The business continuity segment is anticipated to witness considerable growth during the forecast period, as it is important for global businesses to stay connected with their customers even from remote places. The backup alternative provided by DCI facilities can quickly help businesses recover from sudden disasters or unplanned events.

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Component Segment Analysis

Based on component, the global market is divided into service, software, and product. The service segment is further bifurcated into managed service and professional service. Additionally, the product segment is sub-divided into optical DCI and packet-switching networking.

The service segment held a large market share in 2021 and is anticipated to register a substantial growth rate during the forecast period, owing to the expanding demand for managed services in the global market.

The key advantages of managed services in DCI include remote management of the client’s IT infrastructure, security management, monitoring, and hardware assurance. These intelligent data center services are typically provided on a proactive and subscription basis.

The product segment constituted a sizeable market share in 2021 and is expected to grow rapidly during the projected period, owing to the rising demand for optical DCI products. Optical DCI products prove to be advantageous for the high performance of DCI by providing high capacity with less power usage.

Deployment Segment Analysis

On the basis of deployment, the global center interconnect market is bifurcated into small & medium enterprise and large enterprise. The small & medium enterprise segment is expected to grow rapidly during the forecast period due to the rising adaptation to cloud-based solutions by small & medium business organizations.

The large enterprise segment held a major market share in 2021 and is expected to expand at a considerable growth rate during the forecast period, as global large businesses are rapidly diversifying their product offerings and customer services.

These advanced solutions adopted by large-sized business organizations are swiftly transforming their business operations, due to flexible, scalable, and reliable data center interconnect services.

End User Segment Analysis

Based on end-user, the global market is categorized into IT & telecom, healthcare, BFSI, media & entertainment, retail, government, and others.

The media & entertainment segment is projected to hold the key market share during the forecast period, owing to the skyrocketing consumption of video content on various OTT and social media platforms across the world.

The retail segment is anticipated to expand rapidly as the global retail industry is experiencing a significant rise with the help of higher connectivity. The retail industry has a large online consumer base and it is expected to rise further in the coming years. The retail industry needs efficient hyper-connectivity which can be achieved by DCI technology.

Regional Analysis

On the basis of region, the global data center interconnect market is categorized into Asia Pacific, North America, Latin America, Europe, and Middle East & Africa. The market in Asia Pacific is projected to grow rapidly and dominate the market during the forecast period.

The regional market growth is attributed to the rising adoption of advanced technological solutions such as intelligent data center service, cloud computing, the internet of things (IoT), and edge computing in the region.

The market in Europe is expected to grow substantially during the assessment period, owing to the rising adaptation of cloud solutions, rising investment, and increasing number of data centers in the region. The stern laws and regulations in the region, such as personal data protection and general data protection regulation (GDPR), are boosting the demand for establishing local data centers.

Additionally, several innovations from key players in the region to enhance the effective use of data center interconnect solutions facilities including data center power are fueling the regional market.

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