The 100 Gbps Optical DWDM market is finding its footing, growing a  massive 85% Y/Y in the first quarter of 2015, driving revenue up to over one billion dollars.  Long haul applications continued to drive the majority of the demand for 100 Gbps and we estimate that approximately two thirds of wavelength shipments were for long haul applications versus metro applications in the quarter.

Price erosion intensified following a few quarters of better than average price declines—the average selling price (ASP) of a 100 Gbps wavelength declined a little more than 20% in 1Q15.  The main factors behind the higher declines and our predicted future price erosion are:

  • the growing interest in 100 Gbps wavelengths for metro applications
  • introduction of lower priced pluggable CFP2-ACO (analog) components
  • aggressive competition among vendors to obtain new network footprint

A select few vendors have captured a high share of this lucrative market with the early development of coherent optical DWDM line cards using internally developed DSP technology.

The top five 100 Gbps DWDM vendors by shipment share and revenue share in the trailing four-quarter period ending 1Q15.

Vendor Shipment Share Revenue Share
Alcatel-Lucent 13% 15%
Ciena 14% 16%
Huawei 27% 27%
Infinera 16% 10%
ZTE 12% 13%

 

While most would think that a vendor’s shipment share would be the same as their revenue share, it doesn’t seem to be the case for 100 Gbps DWDM for good reason.   The reason being that not all 100 Gbps DWDM line cards are identical; they have not yet been “commoditized.”  Hence, 100 Gbps DWDM line card prices are determined by the market based on a number of factors, a few of which are:

  • region of sale
  • mix of metro, long haul, and submarine applications
  • product cost
  • pricing strategy

Therefore, varying vendor prices due to factors such as these make the difference between shipment share and revenue share results.

Beyond 100 Gbps…

We anticipate a dramatic improvement in demand for >100 Gbps wavelengths such as 200 Gbps wavelengths this year as additional vendors introduce their flexible modulation line cards.  In 2014, Alcatel-Lucent was the only vendor with availability and volume shipments of 200 Gbps capable line cards.  We believe both Ciena and Cisco have started to ship their 200 Gbps capable line cards in 1Q15 and that first revenues will be recognized in 2Q15. Other vendors with 200 Gbps capable line cards include Huawei, Xtera, and ZTE.


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Posted by Jimmy Yu on June 24, 2015

About Jimmy

Jimmy Yu built our coverage on the Microwave Transmission market, significantly expanded coverage on the Optical Transport market, and is responsible for Storage Systems market research. He has authored several Advanced Research Reports on Mobile Backhaul and is researching Carrier SDN.