Dell’Oro: Cumulative Revenue of Provider Routers in Next Five Years will Reach $77 Billion

According to a recent report released by Dell’Oro Group, the cumulative revenue of the service provider router and switch market will approach $77 billion over the next five years. Compared to the cumulative income of the previous five years, this number will increase by 9%. The factors driving market expansion include the popularity of 5G on mobile networks, the shift of residential broadband to higher speed Cable and PON, and the increase in video usage, which are driving continuous traffic growth.

Ivaylo Peev, Senior Analyst at Dell’Oro Group, stated: Although we will see strong market growth in 2023, which is twice the normal growth rate, we expect it to be short-term. Suppliers have been backlog for two years, and the recent strong growth is the result of improved component supply. At the beginning of 2023, we saw particularly strong demand for Hyperscale in North America. These large cloud service providers deploy routers to interconnect geographically dispersed facilities and connect to a wide range of telecommunications service providers Domain network and internal interconnection of data centers. However, we believe that the demand from cloud service providers has exceeded its peak and will slow down during the forecast period. In the past few years, cloud service providers have made significant investments in 400Gbps infrastructure and are well prepared for artificial intelligence workloads.
Other highlights of the five-year forecast report for service provider routers and switches released in July 2023:

1. The expansion of mobile backhaul networks and broadband networks for service providers will drive the growth of their edge routers and convergence switch sectors. Broadband service providers’ investment in optical fiber will drive a significant increase in traffic. Broadband providers will continue to upgrade edge routers to support faster speeds and lower latency.
2. The sales share of Disaggregated Routers is increasing, and this trend is expected to continue throughout the entire forecast period. The existing telecommunications service provider project is currently underway, and new use cases are being transferred from testing to production. The impetus for growth comes from the continuous deployment of AT&T projects, as well as the new deployment of Turkcell, Türkiye’s leading mobile operator, and KDDI, Japan’s first-class telecom operator.