Accelerating demand for gigabit speed commercial services is driving demand for Gigabit Ethernet ports at the expense of lower-speed ports, according to Vertical Systems Group (VSG).
The analysts say that Gigabit Ethernet (GE) ports are increasing at a double-digit compound annual growth rate (CAGR). They are displacing slower 100 Mbps and lower speed services, whose CAGRs are declining. VSG says that by 2027, the number of GE ports will exceed the number of ports operating at 100 Mbps or slower speeds.
“The big picture is that DIA [direct internet access] is the top service for 1+ Gbps speed revenue, and the predominant service for gigabit speed underlays supporting U.S. Carrier Managed SD-WAN customer networks,” wrote VSG principal and co-founder Rosemary Cochran in a blog post.
Commercial Gigabit Ethernet Demand
Cochran wrote that Ethernet Private Line services are the second largest source of gigabit revenue. They are driven by enterprise applications that require “low latency, point-to-point circuits for secure, dedicated access to cloud services.”
VSG offered its expectations for various Gigabit Ethernet speeds.
- 1 Gbps: This is the most widely installed gigabit service based on port installations and will be the top revenue source through 2027 across all Ethernet services. Despite this, VSG says that the revenue outlook is less bright as customers will upgrade to higher speed GE ports or migrate to alternatives such as wavelength services.
- 10 Gbps. This category will enjoy double-digit growth rates through 2027 due to service upgrades and expanding market demand. Revenue is projected to nearly double between 2022 and 2027.
- 100+ Gbps services have a relatively small but rapidly growing base of installed ports. Its attraction, in part, is its competitively lower pricing (per Gbps). VSG says that revenue is projected to almost five-fold between 2022 and 2027.
Moving forward, challenges will come from carrier managed SD-WAN/secure access service edge (SASE), wavelength services and dark fiber, VSG notes.