The datacom optics market was up a healthy 21 per cent in 2014, while telecom optics spending has fallen by 7 per cent year over year. That’s the finding of the latest biannual report into the optical transceiver market from IHS Infonetics (now a pair of reports – one focused on datacom, the other on telecom).
The findings confirm broader market trends, which showed telecoms service providers putting the brakes on spending, while enterprise networks and data centre providers continue to be fuelled by the growth in “cloud” (see Telecom revenue growth stalls but datacom accelerates).
IHS Infonetics report on ‘10G/40G/100G Data Center Optics’ found that revenue from 10G, 40G and 100G optical transceivers sold into the enterprise and data centre markets grew 21 per cent in 2014 to reach $1.4 billion.
The increase was almost entirely due to increased popularity of 40G QSFP (quad small form factor pluggable) modules, the company says. Total 40G transceiver revenue grew 81 per cent in the second half of 2014 compared to the same period a year ago.
"40G transceivers are ramping up hard as data centres deploy 40 Gigabit Ethernet, particularly as a high-density 10G interface via breakout cables. 40G QSFP demand growth over singlemode fibre is primarily a result of large shipments to internet content providers Microsoft and Google," said Andrew Schmitt, research director for carrier transport networking at IHS Infonetics.
The market for 100G data centre optics is accelerating, but it has yet to be turbocharged by widespread data centre deployment in the way 40G QSFP optics has been, he notes. However, that could happen as soon as 2016 as cheap 100G silicon reaches production and QSFP28 shipments surge as a result. “Next year is going to be huge for 100 Gigabit Ethernet,” Schmitt predicted.
The shift to higher speeds is having some impact on sales of 10G modules in the data centre, he adds; nevertheless, 10G shipments continue to grow at healthy rates, with the overall result that worldwide revenue for client 10G modules was flat on a year-over-year basis in 2014.
Data centre transceivers now account for 65 per cent of the overall 10G/40G/100G optical transceiver market, the firm revealed. IHS Infonetics expects the datacom optical transceiver market will continue along its growth trajectory to reach more than $2.1 billion by 2019.
Meanwhile on the telecom side of the business, the findings are less rosy. Although shipments of 100G transceivers surged in 2014, the market contracted overall.
The global market for 10G, 40G and 100G optical transceivers sold to telecom service providers dropped to $762 million in 2014, a 7 per cent decline from 2013's $820 million, according to IHS Infonetics’ ‘10G/40G/100G Telecom Optics’ report.
"The decline in the telecom transceiver market is entirely a result of vertically-integrated 100G network equipment manufacturers displacing shipments of 10G and 40G telecom optical modules,” Schmitt explained.
The surge in 100G WDM transceiver shipments in 2014 was mainly due to huge growth from Huawei and sizable shipments from Alcatel-Lucent, Ciena, Cisco and Infinera. These five vendors control 84 per cent of the 100G coherent market, preventing a material incursion by standalone component vendors and suppressing revenue growth for standalone optical modules.
The market analyst firm believes it will be difficult for standalone components suppliers to make inroads into the 100G telecom optics market in the coming year. Schmitt doesn't foresee a reversal until 2016, when CFP2-ACO modules reach the market, followed by non-coherent 80km transceivers.
The market is seeing the beginning of a long decline in 10G module shipments after an epic 15-year run, with shipments of tunable and non-tunable interfaces down on a year-over-year basis. This effect will become more pronounced as 100G shipments are deployed in greater volume in the metro in 2016, he contends.