The global optical communication and networking equipment market was valued at USD 18.9 billion in 2020 and is projected to reach USD 27.8 billion by 2025; it is growing at a CAGR of 8.0% from 2020 to 2025.
Rising adoption of cloud-based services and virtualization
services all over the world, increasing data traffic due to increased internet
usage, and growing number of data centers are the factors driving the optical
communication and networking equipment industry growth. However, the high
initial investment and increased network complexity are the key factors
restraining market growth. The deployment of VOIP, LTE, and 5G networks; the
extension of networks in developing countries; and the adoption of IoT are
among a few factors that would create opportunities for the players in the
optical communication and networking equipment market. However, the
vulnerability of optical networks to hacking and susceptibility of optical
fibers to physical damage and transmission losses are the major challenges for
this market.
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The market for fiber channel technology-based optical
communication and networking equipment is expected to grow at the highest CAGR
during the forecast period. In enterprise data centers, high-speed fiber
channel networking technology is used extensively to transport data from
storage systems. It ensures that all storage data arrives at its network
destination without loss at extreme throughput and low latency while operating
at high utilization rates without data collisions or the need for
retransmission.
In the optical communication and networking equipment market, data
center applications accounted for the largest share in 2019. This market is
expected to grow at the highest CAGR from 2020 to 2025. The growth of this
market can be attributed to the increasing adoption of cloud computing and the
growing use of smartphones and other connected devices.
Optical switches accounted for the largest share of the optical
communication and networking equipment market in 2019. This market is expected
to grow at a CAGR from 2020 to 2025. Optical switches are the key component of
fiber-optic transmission systems that usually send information over fiber by
turning electronic signals into light. Optical switches are faster, more
efficient, and more scalable. Also, they provide high flexibility in
installation, replacement, maintenance, and reconfiguration of network hardware
and paths, resulting in extremely high reliability and availability, as well as
a reduction in OPEX. Therefore, optical switches are expected to continue to
account for the largest market share in the next 2 to 3 years.
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