The money's on metro cloud


22 January 2015
Andrew Bond-Webster of Infinera

The Dell’Oro Group has drawn attention to the massive potential of the metro optical market, suggesting it could reach us$9 billion by 2018, largely WDM-driven.

According to Jimmy Yu, vice president of Optical Transport Market Research at Dell’Oro Group, “In place of [SONET/SDH], service providers will shift their focus to higher capacity packet-friendly systems such as optical packet-switches and WDM metro.  We predict the market demand for optical packet-switch to grow at a 3 per cent compounded annual growth rate until 2018 and for WDM metro to grow at an average annual rate of 9 per cent.”

This sounds like an exciting opportunity, but I believe it underestimates the real potential for optical networking in the metro area.

Metro networks are characterised by a high concentration of business premises across a relatively small geographical area – allowing service providers to offer high-bandwidth networking at relatively low costs. Now that optical transport can span tens of kilometres without repeaters, there has been a surge of dark fibre being provisioned to serve these metro areas, connecting customer premises to the service provider network. High-speed Ethernet is replacing SONET and ATM because it offers the advantages of simpler technology, higher bandwidth, and less-expensive edge equipment.

This is the metro aggregation market that offers so much potential in the Metro Ethernet market. At the same time, service providers are addressing another type of low-hanging fruit – in the burgeoning cloud market. This typically means providing access for massive data centres, greenfield-sited in more remote areas for environmental and economic reasons.

However, what has been overlooked so far is a smaller market that shows outstanding growth potential. We call it the metro cloud.

While attention has been focused on the giants of the cloudscape – Amazon, Microsoft, Facebook, Apple and the like – other providers and large enterprises have begun to adopt the cloud concept. Service providers getting a share of the action are building data centres in the metro area, with the low-latency benefits of being close to the customers’ premises; and medium sized enterprises are connecting their own data centres to form private clouds. This won’t happen on such a big scale until early 2015, and it shows all the signs of a technology about to go mainstream – and this is potentially huge.

This is the metro cloud opportunity. A small start, maybe, but it is like a match to tinder, because across the world, the SME (small and medium enterprise) population of these metro areas is vast, representing a large potential market.

Cloud computing has become mainstream. What might at first have looked like a clever concept that might fail under real world conditions, has become an everyday service for our smartphones and is working its way rapidly into businesses. Its benefits are compelling.

The opportunity to provide cloud-based services offers enormous potential for large operators and smaller service providers to become cloud operators, and for resellers to build a new portfolio of enterprise cloud solutions. Meanwhile the metro cloud market is emerging and this presents an opportunity for equipment vendors, scaling the metro cloud to enable these services.

  • Andrew Bond-Webster is vice president, Asia Pacific, Infinera