ANALYST PREDICTIONS
T
he optical communications market is driven forward by three customer groups: internet content providers (ICPs), communications
service providers (CSPs) and enterprises. Lisa Huff, principal analyst for optical
communications at analyst Ovum, offered her view on the market for high-speed optical communications at the 2019 ECOC conference and exhibition. Of those three groups ‘everybody knows it’s
the ICPs’ that are the real market drivers, said Huff. She explained that recent figures from Ovum demonstrated that, while CSPs had generated 1 per cent growth, for ICPs this was 12 per cent. ‘ICPs are pushing the industry,’ she said. ‘So optical component suppliers are now becoming more independent and dealing directly with the ICPs.’ Tis is across every part of the optical network,
said Huff, from enterprise to colo, metro, long- haul and subsea. Looking at the data centre market, while Ovum acknowledged that ‘400G is next,’ enterprise data centres will not be doing 400G. Te industry wants to get there prety quickly though, she said, predicting during 2022, which means that the 400G ZR standard is likely to come into effect in 2021.
Predicted growth Huff provided a forecast for optical components, stating 400G is the growth data rate, while 100G will start to taper from 2020. ‘400G starts to be a factor in 2020,’ she said, ‘but the growth will be from 2022-2024.’ She also predicted that 40G will start to disappear, and that we can start to expect to see some 400G in data centres at the end of 2019/early 2020. According to Cignal AI’s Optical Applications
Report, sales of compact modular optical transport platorms slowed in Q2 this year. Tis is despite significant growth from market leader Ciena. Production shipments of new 600Gb/s
platorms are taking longer to ramp as operators require more time to evaluate these next- generation solutions and as a result, Cignal AI decreased the overall compact modular sales forecast for the year. However, further ahead, the firm said that
the outlook for compact modular equipment remains positive, especially in NA and EMEA, where growth is strong as incumbent, cloud and colo operators expand the use of disaggregated networks. Compact modular will additionally claim a greater percentage of the market as operators migrate to IP-over-DWDM in 2022/2023. Scot Wilkinson, lead analyst for optical
hardware at Cignal AI said: ‘Te move to disaggregated networks continues, and compact modular optical platorms are a central part of those network designs. ‘Te rollout of 600Gb/s platorms is taking
Fibre Yearbook 2020
LightCounting’s analysis suggests that global sales of ethernet optical transceivers will post a 22 per cent CAGR in 2019/20
longer than anticipated, but NEL and Acacia- based systems from Cisco, Infinera and others, should recognise greater revenue in the third quarter and will lead a return to growth.’
Significant revenue Te report stated that Ciena maintained its leadership in the compact modular market and was the only vendor to grow sales in Q2 this year. Other vendors are in the middle of a customer transition to higher 400G+ coherent technology. Cisco recognised token revenue from Acacia-
based compact modular systems in the second quarter, and both Cisco and Infinera are expected to recognise significant 400Gb/s+ revenue in the third quarter. Almost 500,000 coherent ports shipped
during the past 12 months, according to Cignal AI, with the vast majority coming from the top five vendors. Volume continued to aggressively rise in 2019, including healthy shipments from Chinese vendors. Te long-haul WDM market also grew this year, due to deployments of the latest coherent technology, while metro growth continued through the year with a delay in competitive price pressure from high-baud-rate optics. Looking at the market for Ethernet optical
transceivers, specialist market research firm LightCounting’s latest High-Speed Ethernet Optics report revealed the market for Ethernet optical transceivers is expected to decline by 18 per cent this year – its steepest decline in recorded history. Te report has more than 50 product
categories, including 10GbE, 25GbE, 40GbE, 50GbE, 100GbE, 200GbE, 2x200GbE and 400GbE transceivers, sorted by reach and form factors. Tis iteration cited the previous market decline in 2009 as 4 per cent, and said that there is no reliable data on the decline during the telecom market crash of 2002-2003. However, that decline was not as steep for Ethernet products as others, as they were not widely used in telecom applications at that point.
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Optical component suppliers are now becoming more independent and deal directly with the ICPs”
Five-year streak According to the latest report, the period from 2004 to 2018 saw global sales of Ethernet optical transceivers increase by 16 per cent CAGR, including a five-year streak of 27 per cent CAGR from 2012 to 2017. Tis growth streak was driven by deployments of optics in mega datacentres, and began with Google deploying 10GbE transceivers in 2007/08 and gained scale from 2012 to 2017 with the adoption of 40GbE and 100GbE transceivers. LightCounting’s analysis suggests that this market segment will post a 22 per cent CAGR from 2019 to 2024, aſter a reset this year, driven by sales of next-generation products and continuing demand for 100GbE optics. Te report found that there are a number of
factors that contributed to a slowdown in the market growth last year and a decline this year, including a longer transition than expected to next-generation products; new lows for 100GbE prices in Q1 this year and reset expectations for the pricing of next-generation products; together with a slowdown in cloud spending on optics deployed inside mega datacentres. Tere is also the economic uncertainty caused
by relations between China and the US to consider. LightCounting’s report said that this has already impacted the economy in China, resulting in Chinese cloud companies lowering their spend on high-speed optics. Meanwhile, more conservative infrastructure spending of US-based vendors also aligns to the uncertain macro- economic situation. n
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LightCounting
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