By Pauline Rigby
Cloud and hyperscale data centre providers like Facebook, Google and Microsoft have dramatically changed the dynamics of the optical components industry over the past few years, and that influence is going to deepen, according to speakers at OFC 2017.
Today, cloud providers account for around 20 per cent of the optical components market, according to Todd Swanson, executive vice president, sales, marketing, research and development, Finisar, citing research from LightCounting. Over the next five years, that share will increase to 30 per cent, reaching $3.5 billion out of a total market size of $11.3 billion in 2021.
Then consider the fact that the majority of the cloud optics market constitutes just four data centre operators: Amazon, Facebook, Google and Microsoft. They stand out as a category in their own right because they buy a completely different class of equipment from the enterprise data centre customers.
The cloud players have been a presence at OFC for a while, but things moved up a notch this year with Urs Hölzle, Google’s senior vice president for technical infrastructure, delivering the keynote speech at the conference on Tuesday.
Traffic inside Google’s data centres increased by a factor of 50 over a five or six-year period, he said. That effect is now being magnified by the trend towards what Hölzle calls Cloud 3.0, where everything is delivered “as-a-service”. Cloud data centres are moving to an environment where customers don’t see the servers anymore; their applications are run by the control engine and may change zones or regions without the customer taking any action or even noticing.
“Data centre disaggregation is driving a bandwidth explosion,” he told delegates. “Incremental improvements aren’t going to work because we’re in an era of 10x growth across all our markets.”
Google wants massive leaps in bandwidth from data centre optics combined with price reductions. “The current model is to use pluggable optics, it’s working but it’s on the edge of what we can do,” said Hölzle. “We would like to move to something cheaper and more industrially manufactured. Optics is still an artisan craft; if really want improvements of 10x, then you’ve got to automate. We’re really looking forward to [an optics] model that looks more like the rest of the data centre model and chipsets.”
As Hölzle’s words indicate, the hyperscale players are demanding customers. They don’t want the same things as the enterprise data centre operators, and they don’t necessarily want the same things as each other.
Think back to 2010 when Google said it needed to deploy 100G inside its data centres quickly. It sponsored the 10x10 multisource agreement (MSA) for 2km links as an alternative to the IEEE’s 100 Gigabit Ethernet 100G-Base-LR4, which was based on technologies that were further from commercial readiness. 10x10 was a transitional approach; it was one of numerous optical module multisource agreements (MSAs) developed for 100G short reach optics inside the data centre.
Today, multiple options are already being developed around next-generation data rates inside data centres. Google and Microsoft are considering a move to 200G optics inside their data centres. Using technology that is near commercial readiness – four channels at 50Gb/s with PAM-4 modulation – the cloud companies could save considerable power per bit. The power dissipation of Finisar’s prototype 200G QSFP28 module (which was demonstrated on its booth) is just 4.5W, compared to 3.5W from the 100G part.
Facebook, on the other hand, sees no need for an interim step, and is planning to migrate straight to 400G when the technology is ready. “If 400G is using more power than four times 100G then it really would not make sense to deploy it,” said Katharine Schmidtke, Facebook ‘s head of optical strategy. Facebook would like power consumption of less than 7W per module, she adds.
Market fragmentation is a problem for optical components suppliers. Since the components being developed are often “cloud specific”, they do not have an application outside that space. To reach comfortable profit margins, optics suppliers need to develop products for a broader application segment than just one customer, even a hyperscale one.
Correction: An earlier version of this article incorrectly stated the total size of the optical components market in 2021. This version has been corrected to reflect this and we apologise for the error.