The following is an excerpt from the OFC 2016 First News that Dell’Oro Group contributed to.
Finally, the wait is over. While it felt like an eternity, OFC week is now just around the corner. More importantly, all the companies that have been holding back their product announcements for this one week, dedicated to all things optical, can now share what they have been working on up to this point. In this early batch of first news releases, we reviewed press releases from 23 different companies.
A look at the first wave of press releases point us to a belief that the theme of OFC 2016 will be about speed and efficiency.
Regarding speed, the press releases were geared around the development of higher speed components and better testing equipment as well as 100 Gbps WDM system deployments. The companies in this category of announcements included:
|Gowanda Electronics||Maxim||Phoenix Photonics||Teledyne|
|Keysight Technologies||Methode||Polatis||VI Systems|
Regarding efficiency, the press releases announced better manufacturing and test equipment with additional functions to reduce time and waste. Furthermore, this year efficiency announcements went beyond equipment and includes software, services, and organizational changes. SDN is here and companies are positioning themselves to capture the opportunity and extract value. The companies in this category of announcements included:
|ADVA||Connected Fiber||Luna Innovation||VPI Photonics|
|Aria||Fiber Optic Center||Polatis|
|Calient||inTest Thermal Solution||TDK|
Further detail on each of the company announcements mentioned are included below. Please take the time to read them in preparation for OFC week, a week dedicated to all things optical.
Similar to the theme of these early press releases, here at Dell’Oro Group, we believe one of the top topics at OFC 2016 will be about higher speeds, about going beyond 100 Gbps WDM to 200 Gbps and 400 Gbps. More specifically, we believe this is the year for 200 Gbps WDM and that discussions at OFC 2016 will levitate towards higher capacity product platforms, higher speed components, and faster test equipment to support the demand for 200 Gbps WDM line cards.
In Dell’Oro Group’s latest Optical Transport research report, we find that demand for 200 Gbps WDM is outstripping earlier projections and we continue to raise our forecast with each report. While the total number of 200 Gbps wavelength shipments is still low, the associated revenue that system equipment manufacturers garner has reached a material level. We estimate that 200 Gbps WDM line card shipments resulted in approximately $230 million of revenue in 2015 and project them to drive at least $720 million in 2016.
There are three drivers for 200 Gbps wavelength demand:
- Supply: Up until mid-2015, Alcatel-Lucent (now Nokia) was the sole vendor supplying a high volume of 200 Gbps WDM line cards. We anticipate that by mid-2016, at least seven vendors will begin volume shipments of these line cards, reducing a service provider’s dependence on a limited number of suppliers. By 2017, all WDM vendors will likely offer a 200 Gbps line card.
- Price: For metro applications, a 200 Gbps line card is priced favorably against a 100 Gbps line card. We estimate that in 2015, the average price of a 200 Gbps line card on a dollar-per-bit basis was approximately 15% to 20% below that of a 100 Gbps line card.
- Efficiency: Besides doubling the capacity of a single fiber, use of 200 Gbps line cards can optimize network utilization. Since all 200 Gbps wavelengths are delivered on flexible modulation line cards that can operate at speeds ranging from, say 50 Gbps to 250 Gbps, a service provider can choose the appropriate line speed for the current demand. Therefore, a service provider can choose to operate a link at a higher utilization by running at 100 Gbps until the need arises to shift the line speed to 200 Gbps in the future.
Needless to say, we believe the future is bright for 200 Gbps WDM, and we think it’ll be a focal point at OFC 2016.