Data Center Interconnect Market Expected to Reach $27.6 Billion by 2031—Allied Market Research

According to a new report published by Allied Market Research, titled, “Data Center Interconnect Market," The data center interconnect market was valued at $8.2 billion in 2021, and is estimated to reach $27.6 billion by 2031, growing at a CAGR of 13.1% from 2022 to 2031.

Data Center Interconnect (DCI) technology uses high-speed packet-optical communication to connect two or more data centers over brief, medium-term, or long-term distances. Data, applications, and content are stored and processed in data centers. Access to that data is a major problem in today's cloud-based, application-centric world. Data centers must communicate with one another to share information and content and to offer backups for redundancy. Fortunately, DCI technology makes it possible for vital assets to be transported over any distance, including short local distances as well as extremely lengthy trans-Pacific links. Simple point-to-point connections, more durable ROADM-based networks, or open line systems that accept transport interfaces from many vendors can all be used to carry data. Moreover, the emphasis by the data center providers on latency, throughput, streamlined operations, intelligence, security, and maintenance is expected to drive the growth of the industry during the forecast period.  In addition, the surge in demand for higher bandwidth in line with the continued advances in the latest technologies, such as the Internet of Things (IoT), has triggered the need for linking data centers reliably and cost-effectively, thereby driving the adoption of Data Center Interconnect (DCI) solutions.

Furthermore, increase in adoption cloud-based solutions and the increase in the utilization of cloud storage for driving the adoption are driving the data center interconnect market size. In addition, the cost-efficient benefits of data center interconnect industry are fueling the growth of data center interconnect market share. However, the significant upfront expenditure required to set data centers limit the growth of this market. Moreover, the escalating demands for business continuity and disaster recovery is expected to provide lucrative opportunities for the market growth during the forecast period.

On the basis of application, real-time disaster recovery and business continuity segment dominated the data center interconnect market analysis in 2021, and is expected to maintain its dominance in the upcoming years, owing to the rise of automation and digitalization trends in various industries such as healthcare, banking and finance. Furthermore. increase in strategies such as data replication, workload mobility, cloud-based solutions and Business continuity planning (BCP), to support real-time disaster recovery and business continuity in data center interconnect industry. However, shared data and resources segment is expected to witness significant growth, owing to the increasing use of shared storage, such as a storage area network (SAN) or network-attached storage (NAS) system, which allows all servers in the cluster to access the same data.

Region wise, the data center interconnect market forecast was dominated by North America in 2021 and is expected to retain its position during the forecast period, owing to spread of 5G technologies worldwide and rise in demand for secured network service in U.S. and Canada. Moreover, North America data center interconnect market includes huge presence of leading data center interconnect providers and rapid expansion of the IT & telecom industry. However, Asia-Pacific is expected to witness significant growth during the forecast period, owing to surge in smart technologies, loT-powered devices, Big Data, Industry 4.0, 56, and cloud computing. Moreover, the region has a robust IT infrastructure and solid software and service offerings, as well as leadership positions in emerging fields including robotics, which provide lucrative growth opportunities for the data center interconnect market.

The data center interconnect market has been considerably disrupted by the COVID-19 outbreak. The result was a total stoppage of industry and manufacturing all across the world. This pandemic had a significant negative influence on the world economy, which created additional challenges for numerous industries and businesses around the world. Additionally, the data traffic has increased due to the pandemic. Growing need for storage space is a result of emerging technologies like the Internet of Things (IoT), big data, and artificial intelligence. The global investments in data center connection have been driven by this uptick, nevertheless. Additionally, it broadened the market's reach for data centers. Although the labor scarcity caused a supply chain disruption for the data center construction projects, it was not anticipated that this would cause the completion of many projects to be delayed. This was only noticeable in the first stages. Unexpectedly high levels of video streaming and conference use, particularly during the time of the nationwide lockdown, increased the bandwidth requirements for networks worldwide. The market is currently expanding following the pandemic as a result of quick digitization and more 5G services.

Government Initiatives:

The growth of data center interconnect market is attributed to the growing government initiatives and activities for the deployment of data centers across diverse sectors. Government is taking constant efforts for the deployment of data centers in to support end-users to enhance data centers services across a range of verticals owing.   

For instance, in April 2022, Government is formulated a scheme to incentivize investments to set-up hype scale data centers in India and boost the capacity of the existing data center in India and boost the capacity of the existing data center ecosystem, besides working on new segments like drones and robotics to develop their manufacturing ecosystem in India. Government also prepared a scheme or policy on hyperscale data centers, and also a scheme for incentivizing investments in hyperscale data centers in India. The current scale of hyperscale data centers in India compared in terms of power consumed is 200 MegaWatts and effort is a policy and scheme that aims for a tenfold growth. Such government initiatives have fueled the data center interconnect market growth.