Wednesday, August 14, 2013

Ovum predicts the global enterprise Ethernet services market to exceed US$62bn by 2018

Melbourne, 14 August 2013 – The global enterprise Ethernet services market will exceed US$62bn by 2018, with the market growing at a 13.6 percent compound annual growth rate (CAGR) from 2012, says global analyst firm Ovum.

In a new forecast*, the independent telecoms analyst firm found Ethernet services revenues in 2012 were up to US$29.1bn, from US$26.5bn in 2011. For 2013, the Ethernet market is projected to be up 16 percent, reaching US$33.8bn.

Regionally, Ovum is projecting steady growth for North America at 11 percent CAGR for revenue from 2012–18. Meanwhile, EMEA has a higher growth potential at 14.9 percent CAGR based on carrier activities in Eastern Europe and the Middle East. In the Asia-Pacific region, excluding Japan, the growth forecast is at 23.9 percent based on a growing Ethernet market in China and the ASEAN-5 (Indonesia, Malaysia, Philippines, Thailand, and Vietnam). Japan, the largest Ethernet market in Asia-Pacific at US$6.5bn in 2012, is projected to continue at a mature market CAGR of 5.3 percent.

“Ethernet and IP VPN are the two essential data-optimized WAN connectivity technologies that are supplanting many legacy data connectivity technologies,” explains Ian Redpath, principal analyst, Network Infrastructure, at Ovum. “The resilient nature of Ethernet service growth is underpinned by a number of factors. Enterprises continue to combine previously separated voice and data networks into one converged Ethernet network connection, are comfortable in doing so, and are happy to reap the connectivity savings.”

Emerging Ethernet markets in many countries will have a long run of port growth ahead as their fundamental telecom infrastructure is improved, enabling more businesses to connect to local and global networks. In the highly developed Ethernet markets, bandwidth-per-port growth will be the story as more bandwidth-intensive applications ride over the top of the Ethernet connection.

“A large-scale optical network refresh is under way worldwide. The latest wave of network upgrades is enabling the 100GE-as-a-service market to begin. The new multi-terabit optical systems can accommodate 100GE as a service and the communications service providers (CSPs) are starting to roll out 100GE as a service,” says Redpath. Ovum projects the 100GE market will start modestly. Deployments are likely in CSPs' wholesale and high-capacity data center interconnect types of applications, but will broaden in time in major network global hub and data center–dense markets.

“The most fundamental state-of-competition factor is the number of players in a market. Competition continues to heat up in key global cities and regions. CSPs will need to continue to sharpen their differentiators: access, interconnection, cost base, service wrap, and bundle propositions,” recommends Redpath.

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