IP-over-DWDM Pluggables Forecast

Introduction

Since the volume introduction of 400ZR optics in 2022, all eyes have been on IP-over-DWDM and its potential impact on optical networking. Cignal AI previously looked at the impact of IP-over-DWDM by forecasting the degree to which it will reduce spending on optical transport systems as router-hosted optics cannibalize traditional transponder sales. The magnitude of this shift was expected to temper growth in Metro optical transport, and over the last few years we’ve seen just that. Long Haul is outpacing Metro and now accounts for over half of all optical transport sales.

This report takes a deeper and more nuanced look at the rates of adoption fueling this seismic shift in spending. The market for router-hosted pluggables is already sizeable, but it will continue to further grow as operational issues are solved and new generations of optics evolve. The uptake of IP-over-DWDM will vary significantly between market segments, as will the preferences for the type of optics.