800G Ethernet optical modules will dominate the market by 2025, according to LightCounting, a market research firm. LightCounting points out that the world's TOP 5 cloud makers -- Alibaba, Amazon, Facebook, Google and Microsoft -- will spend $1.4 billion on Ethernet optical modules in 2020, and that their spending will rise to more than $3 billion by 2026. The 800G light module will dominate this segment from the end of 2025, as shown below. In addition, Google plans to begin deploying 1.6-terabyte modules in four to five years. Co-Packaged optical devices will begin to replace pluggable optical modules in cloud data centres in 2026.

LightCounting says three factors have contributed to the increase in sales forecasts for ethernet optical modules. According to the latest data shared by Google at the 2021, the growth in data traffic driven by artificial intelligence applications is promising. Vendors of 800G Ethernet optical modules and components that support these modules are progressing well. The demand for bandwidth in data center cluster is higher than expected, mainly rely on DWDM. Google's latest data on the growth of traffic in its network shows a 40 per cent increase in regular server traffic and a 55-60 per cent increase in traffic to ML applications. What's more, AI traffic (such as ML) accounts for more than 50% of its data center traffic. This forced LightCounting to raise its assumptions about the future growth rate of data center traffic by several percentage points, which had a significant impact on market forecasts. LightCounting notes that the demand for network bandwidth to connect to data center clusters continues to be surprising. Since cluster connectivity ranges from 2 Km to 70 km, it is difficult to track the deployment of optical modules, but our estimates have been improved in the latest prediction model. This analysis explains why Amazon and Microsoft are eager to see the 400 zr module in production now and the 800 zr module in 2024.