Metro WDM equipment spending will soon be disrupted by a transition to pluggable optics used in routers, according to the recent "Assessing the Impact of IPoDWDM" report from Cignal AI. IPoDWDM is a 20-year-old concept, but new factors such as the emergence of 400ZR, architecturally progressive hyperscale network operators, and changing traffic and network management trends will catalyze widespread deployment by 2026.
This report is the last in a three-part Active Insight series, spanning detailed conversations over the past six months with network operators, equipment makers, and component manufacturers. The report series provides a qualitative and quantitative study of IPoDWDM's role in shaping network operator spending and deployment trends. The results are based on a model combining Cignal AI's comprehensive industry knowledge and revenue and port shipment database, including optical components, optical transport hardware, and service provider routers.
Additional Report Findings:
- Most Ip-over-DWDM modules deployed by hyperscale operators will drive new applications and architectures, but roughly half of these modules will replace traditional standalone hardware.
- Total Cloud spending on traditional optical transport hardware will decline 5% annually through 2026.
- IP-over-DWDM module revenue will more than offset this decline as 400ZR and 800ZR pluggables will represent nearly half of WDM transport spending by hyperscale operators.
- Coherent modules used in IPoDWDM applications represent a $1.6B opportunity by 2026.
- Service Provider optical spending will be flat through 2026 as a drop in Metro WDM spending due to IPoDWDM will offset growth in Long Haul.
Kyle Hollasch, Lead Analyst for Transport Hardware at Cignal AI
IP-over-DWDM is poised to disrupt the Metro WDM equipment market and will shift some revenue and technical leadership to vendors of coherent pluggables. A significant amount of hardware spending will be displaced, but total spending on equipment and pluggables will continue to grow due to the new applications enabled by router-hosted pluggable coherent modules.
