A new Dell’Oro Group forecast calls for service provider router and switch market revenues to grow at a compound annual rate of 2% through 2027, reaching nearly $77 billion by the end of the forecast period.
The analyst firm credits the expected growth primarily to wide adoption of 400 Gbps products. Additionally, telecommunications and cloud service providers will continue investing in network upgrades to accommodate increasing traffic levels and to benefit from the economic efficiency of 400 Gbps technology.
The service provider core router portion of the market will grow at a projected 4% CAGR from 2022 to 2027, with growth to be largely driven by the adoption of 400 Gbps technology.
The newest generation of high-capacity ASICs supporting 400 Gbps equipment offer higher speeds per port and decreased energy consumption, thus reducing the total number of ports required, Dell’Oro Group notes. As a result, chassis size will decrease.
The higher speed per port also lowers the cost per bit per port.
“The reduced energy consumption and the smaller, rack space-saving format of the router, will make transitioning to 400 Gbps ports more economically efficient for service providers,” said Dell’Oro Group in a press release.
Service Provider Switch and Router Forecast
The early part of the forecast period may be a bit shaky, though, according to Ivaylo Peev, Dell’Oro Group senior analyst.
“Our forecast growth projections remain largely unchanged compared to our previous forecast,” said Peev in a prepared statement. “We anticipate continuing market uncertainty and worsening macroeconomic conditions in the first few years of the forecast period as economists are projecting a high possibility of recession in Europe and North America.
“However, we expect the global [service provider] router and switch market to stabilize in the second half of the forecast period, as we assume that the underlying fundamentals of the service provider router market remain healthy.”
The forecast follows another Dell’Oro Group report predicting growth in the PON market.
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