In 2025, the optical transport equipment market posted a solid 10% gain. Surging demand from cloud providers for data center interconnect (DCI) gear powered most of that growth.
This blog tries to make sense of those Dell’Oro Group findings. We’ll highlight who actually bought what, which technologies stood out, and maybe even guess what’s next for 2026 as cloud-scale networks keep evolving around AI datacenters.
Market momentum in 2025
The year saw strong activity in both traditional optical transport systems and more specialized DCI components. Hyperscale operators ramped up buying for DCI technologies like WDM transponders, ZR optics, and optical line systems.
Direct cloud-provider purchases jumped by about 50% in 2025. That’s a pretty big shift toward self-directed capacity planning among the largest cloud players.
Two trends stood out: one, Optical Transport Systems and IPoDWDM ZR/ZR+ optics made a big impact. Two, the Disaggregated WDM market expanded by roughly 40% thanks to strong demand across transponder units, optical line systems, and IPoDWDM ZR/ZR+.
These factors lifted the entire optical transport ecosystem.
Who bought, and who supplied
Market leadership stayed concentrated among a handful of system vendors. Huawei, Ciena, Nokia, ZTE, and Cisco made up the top five by revenue share in 2025.
Within DCI, Ciena, Nokia, and Cisco led by revenue. It’s a tight, high-stakes race at the core of data-center interconnect deployments.
Most DCI revenue came from North America. Hyperscalers and big cloud players there drove much of the spending.
This regional focus probably reflects the sheer number of hyperscale campuses and the ongoing push to connect sprawling AI and analytics workloads across scalable networks.
Technology and product highlights
Certain product categories and technology trends really mattered in 2025.
- DCI-specific gear: Demand increased for transponders, optical line systems, and supporting IP/packet transport tech built for intercity and inter-data-center links.
- IPoDWDM ZR/ZR+ optics: These high-density, long-reach optics were crucial for scalable interconnects between big data centers and metro cores.
- Disaggregated WDM: Disaggregated approaches—separating optics from equipment—let operators mix and match for more flexibility and cost savings.
All this demand for disaggregated WDM and strong DCI implementations points to a shift toward flexible, scalable networks. These networks are built to handle peak AI and big-data workloads.
Vendors kept pushing the envelope on transponder performance, better modulation formats, and easier management for large-scale optical fabrics.
Implications for vendors and regional players
With a small group of vendors leading revenue share, competition stays fierce on both technology and deployment speed. North America’s focus in DCI revenue hints at chances for regional system integrators and service providers to tailor solutions for dense cloud campuses and intercity links.
Ongoing advances in ZR/ZR+ optics and IPoDWDM solutions suggest more choices coming for operators looking to balance density, reach, and energy efficiency in next-gen networks. There’s no shortage of options, honestly—and that’s probably a good thing.
What to expect for 2026
The optical transport market should grow by about 10% in 2026. That projection points to steady demand for capacity expansion and next-generation DCI capabilities.
Even more interesting, DCI revenue could jump at a much faster pace as cloud providers ramp up their AI datacenters. They’re chasing low-latency interconnects across increasingly scattered architectures.
How much momentum we’ll see in 2026 probably depends on how quickly hyperscalers and neo-clouds jump on integrated, scalable optical architectures. The real game is combining high-capacity WDM transport with flexible, software-driven management.
Hyperscalers and the rising neo-clouds aren’t just after more capacity—they want smarter, more agile networks that can handle AI workloads at scale.
If you’re a technology provider, it’s hard to ignore the message: focus on high-density, flexible optics, strong DCI solutions, and modular, disaggregated architectures. The market doesn’t look like it’s slowing down anytime soon.
Here is the source article for this story: Optical Transport equipment market grew 10% last year and forecast to grow 10% this year.