However, an interesting takeaway from Jimmy’s presentation, is that nearly all of the client side ports are still using 10 Gbps pluggables instead of 100 Gbps pluggables. When 10 Gbps DWDM began rolling out, it took approximately three years before it was deployed in large volumes, and before it began its tenure as the dominant speed for the next twelve years . Adoption of 100 Gbps seems to be mirroring this path. The use of 100 Gbps client side ports on 100 Gbps DWDM is currently low due to its price, size and power.
According to Jimmy, in order for 100 Gbps to move to the client side, 100 Gbps pluggable prices need to come down further. The high price elasticity of demand for 100 Gbps will help drive growth. For example in DWDM, 100 Gbps DWDM elasticity of demand is in the range of ten to fifteen. This means that a 1% price drop will drive a 10% to 15% increase in unit shipments.
Unlike 40 Gbps, 100 Gbps is expected to be around for a very long time. On a revenue basis, by 2018 about $35 billion will be derived from 100 Gbps DWDM line cards. So for the Optical market, Jimmy expects that 100 Gbps will in essence be as popular as the 10 Gbps.