Large Shift to ZR+ Optics due to Scale-Across DCI
REDWOOD CITY, Calif.
According to a new IPoDWDM and Disaggregated WDM report from Dell’Oro Group, the trusted source for market information about the telecommunications, security, networks, and data center industries, the market for IP-over-DWDM (IPoDWDM) is forecast to grow at a 27 percent compounded annual growth rate (CAGR) for the next five years, surpassing $7 billion by 2030. Deployment of scale-across data center interconnect (DCI) is expected to drive a significant portion of the growth and shift the market toward more ZR+ optical pluggable modules beginning this year.
“Without a question, AI is driving the market demand for optical transport equipment, especially ZR/ZR+ optics for IPoDWDM,” said Jimmy Yu, Vice President at Dell’Oro Group. “Building of AI infrastructure is creating such a large shift in optical transport demand that we have had to raise our forecasts across multiple technology segments, especially IPoDWDM and Disaggregated WDM—both of which are heavily used for connecting the front-end of cloud data centers across metro and long-haul spans. The next big thing is scale-across DCI, or connecting the back-end of AI data centers, to form larger AI training facilities,” added Yu.
Additional highlights from the IPoDWDM and Disaggregated WDM Advanced Research Report:
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Demand for IPoDWDM accelerated in 1Q 2026, driven by stronger demand for 800 ZR+ optics. We estimate IPoDWDM revenue grew over 30 percent year-over-year in the quarter. Cisco Acacia took the top spot in ZR/ZR+ module shipments in the quarter. Marvell had the next highest shipment share.
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ZR/ZR+ optical pluggable module shipments, most of which will be installed on a router and switch, are forecast to have a five-year CAGR of 29 percent.
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The Disaggregated WDM market, which includes IPoDWDM ZR/ZR+, transponder units, and optical line systems, continued to outperform the integrated systems market and grew 50 percent year-over-year in the quarter. Ciena continued to hold the highest market share at approximately 40 percent. The next highest share was held by Nokia.
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Disaggregated WDM is forecast to grow at a five-year CAGR of 17 percent, approaching $13 billion by 2030. This growth is projected to be driven by both cloud providers and communication service providers (CSPs).
About the Reports
Dell’Oro Group’s IPoDWDM and Disaggregated WDM report highlights the implementation of ZR/ZR+ optical pluggable modules in optical transport with a quarterly update and 5-year forecast. Three markets are covered in this report: IPoDWDM, Disaggregated WDM, and ZR/ZR+ optical pluggable modules.
