Dell’Oro reckons IPoDWDM and Disaggregated WDM will grow at an average annual rate of 16%, reaching $4.4 billion by 2030; market for ZR+ module to grow sharply in 2026
Dell’Oro Group’s new report on IP over Dense Wave Division Multiplexing (IPoDWDM) and Disaggregated WDM expects demand to grow at an average annual rate of 16%, reaching $4.4 billion (€3.74 billion) by 2030. Shipments of ZR+ optical pluggable modules, that is, with line capacities up to 400Gbps, in routers and switches are expected to jump in 2026 as hyperscalers scale up across data centres to build larger AI factories.
“The interest level in ZR+ optics has grown by ten times since just a year ago,” said Jimmy Yu, Vice President at Dell’Oro Group. “In the original inception of coherent ZR pluggable modules, the dominant use case was for interconnecting data centers less than 80 km apart. The ZR+ versions were developed as an afterthought without a clear need.
“Since then, with the sudden rise in power-hungry AI data centers, the need has shifted to moving data centers farther out, with much more fiber capacity between them to handle the intensive AI workloads. This need to scale-across data centers to build up AI training centers is sharply pivoting demand for IPoDWDM systems with large amounts of ZR+ optics,” added Yu.
Other highlights from the report are:
• More than 25% of revenue from IPoDWDM systems is expected to be from applications other than data centre interconnect (DCI) by 2030 as more communication service providers adopt the technology in their networks.
• Demand for IPoDWDM systems started to recover in 2Q 2024 and is on track to grow nearly 40% in 2025. ZR optics is the dominant pluggable module used in IPoDWDM.
• Scale-across DCI is expected to change market dynamics, driving a sharp increase in 800 ZR+ optical module shipments in 2026. Based on projections for volume and average sales price, more than a third of revenues from IPoDWDM ZR/ZR+ is expected to be from 800 ZR/ZR+ module shipments next year.
• In 3Q 2025, the top three suppliers for ZR/ZR+ optical pluggable modules listed in descending order of the volume of shipments were Marvell, Cisco and Ciena.
