Dell’Oro Group forecasts IPoDWDM market growth at 27% CAGR

Dell’Oro Group forecasts IP-over-DWDM (IPoDWDM) market growth at a 27% compound annual growth rate through 2030, citing demand tied to AI infrastructure and a shift toward ZR+ optical pluggable modules as scale-across data center interconnect expands.

Market outlook for IPoDWDM and disaggregated WDM

Dell’Oro Group’s IPoDWDM and Disaggregated WDM report projects IPoDWDM revenue to surpass $7 billion by 2030, with growth forecast at a 27% CAGR over the next five years.

The firm says deployment of scale-across data center interconnect (DCI) is expected to drive a portion of the growth and move the market toward ZR+ optical pluggable modules beginning in 2026.

What is driving demand

Jimmy Yu, Vice President at Dell’Oro Group, said, “AI is driving the market demand for optical transport equipment, especially ZR/ZR+ optics for IPoDWDM.”

Yu added that “we have had to raise our forecasts across multiple technology segments,” referencing IPoDWDM and Disaggregated WDM used for connecting front-end systems across metro and long-haul spans.

Quarterly findings and supplier notes

Dell’Oro Group estimates IPoDWDM revenue grew over 30% year-over-year in 1Q 2026, driven by demand for 800 ZR+ optics.

The note says Cisco Acacia led ZR/ZR+ module shipments in the quarter, while Marvell had the next highest shipment share.

ZR/ZR+ pluggable modules and disaggregated WDM growth

ZR/ZR+ optical pluggable module shipments, most installed on a router and switch, are forecast to grow at a five-year CAGR of 29%.

The firm reports that disaggregated WDM grew 50% year-over-year in the quarter and continued to outperform the integrated systems market.

Ciena held the highest disaggregated WDM market share at approximately 40%, followed by Nokia as the next highest share holder.

Forecast for disaggregated WDM

Disaggregated WDM is forecast to grow at a five-year CAGR of 17%, approaching $13 billion by 2030.

Dell’Oro Group attributes the forecast to demand from both cloud providers and communication service providers (CSPs).

This Analyst Signals brief reflects a neutral, fact-based summary of the original research note.