$9B Market Opportunity
$9B Market Opportunity for On-Demand Services
For years now, our industry has discussed the growing need for dynamic on-demand network services. For example, we’ve recently seen NTT announce on-demand and usage-based pricing for network services up to 1G. This trend will continue in the market, informing the on-demand and usage-based pricing of network connectivity services.
One of the main questions, however, is the size of the market: How big is this opportunity for service providers? We estimate that the potential size of the on-demand Optical and Ethernet services market is $3 billion – not in 5 or 10 years, but right now.
For 2015, we estimate that $3 billion of the static market could shift to the on-demand market if more service providers were to offer on-demand services – and that by 2018 this figure will exceed $9 billion.
Estimation based on Optical and Ethernet services markets
To calculate this estimation, we used the total size of the Optical and Ethernet services market. Let’s start with the Ethernet services market, which currently equates to approximately $50 billion and includes both wholesale and enterprise/retails services, as indicated by approximate projections from research and analysis firms Ovum, Vertical Systems, and Infonetics.
By adding the Optical wavelength services market projection from Frost & Sullivan to this initial figure, the global Optical and Ethernet services market, which is currently growing at a healthy rate, is expected to reach $58 billion by 2016. Not only that, but the Carrier Ethernet services market shows a 12% CAGR, with forecasts reaching $70 billion by 2018.
In previous posts, we discussed the benefits of offering on-demand services to enterprises who are stuck at lower bandwidth rates and are experiencing less-than-ideal static services performance due to the contractual nature of service offers and the lengthy lag time to provision. Assuming a gradual uptake and transition of these static connectivity services to on-demand services of just 5–7% between 2015 and 2016, and an additional 10–12% between 2017 and 2018, the market for on-demand services will reach approximately $9 billion by 2018.