Significant 400G growth won’t begin until 2019, says new Cignal AI forecast

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Networking component and equipment market research company, Cignal AI has updated its growth forecast for the coherent 400G WDM market.

Issued quarterly, the recent Optical Hardware Applications report covers the first quarter of 2018 and includes market share and forecasts for revenue and port shipments for optical equipment designed to meet the needs of specific applications: 100G+ coherent, compact modular and advanced packet-OTN switching hardware.

It features revenue-based market size and share for the hardware categories, and detailed port-based market size and vendor market share for 100G+ shipments. Amongst vendors examined were: Acacia, Adtran, ADVA, Ciena, Cisco, Coriant, Cyan, ECI, Ekinops, Fiberhome, Fujitsu, Huawei, Inphi, Infinera, Juniper Networks, NEC, Nokia, NTT Electronics (NEL), Padtec, TE Conn, Transmode, Xtera and ZTE.

Providing forecasts in three key markets: 100G+ coherent WDM, compact modular equipment, and advanced packet-OTN switching hardware, the report’s key findings include the rapid growth of 100G+ coherent ports shipments in Western markets, increasing more than 50 per cent for 2017 and outpacing growth in China for the first time. Despite the increased port shipments, said Cignal AI, a challenging pricing environment kept revenue growth flat.

In addition, coherent 200G now accounts for more than 10 per cent of the market, with shipments led by Ciena and Nokia, and 2018 will usher in more market stability with less disruption by new companies and technology. A better pricing environment and improved financial results are expected as a result. When it comes to significant 400G growth, this is predicted not to begin in earnest until 2019, as Ciena is the only production supplier of this technology in 2018.

When it comes to compact modular equipment, 2017 revenue quadrupled, according to the report, as cloud and colo vendors migrated hardware architectures to the new form factor. Ciena and Cisco were the beneficiaries of this growth due to their state-of-the-art systems. These two vendors along with Infinera accounted for most shipments during 2017.

Said Cignal AI, hardware disaggregation is driving interest in compact modular equipment, as operators begin to embrace this model to gain greater supply chain flexibility. Cable MSOs, wholesalers and incumbents such as AT&T are showing interest in this category to build disaggregated networks. The report forecasts that the market will expand rapidly as carriers outside of the cloud vertical utilise this equipment, creating multiple market entry points for a variety of vendors.

Large incumbent operators, said the report, continue deployments of advanced packet-OTN switching systems. Despite the complexity, this system remains the best approach for unifying multiple legacy networks and applications onto a single transport infrastructure. The market grew 35 per cent in 2017 with strong shipments in China and EMEA, which primarily benefited Huawei and Nokia.

Andrew Schmitt, lead analyst for Cignal AI commented on the report’s findings: ‘Coherent 400G will cap the growth of existing 200G and 100G technologies by 2020 as new equipment becomes available that maximizes optical capacity independent of reach. Compact modular equipment is the enabling platform, with revenue almost quadrupling in 2017, and we expect that it will continue to grow at least 40 percent per year through 2022.’

The previous report, which covered the final quarter of 2017 highlighted amongst its findings, a growth in spend in the Asia and the EMEA region as larger equipment vendors gained traction (see Cignal AI Q4 2017 Optical Hardware Report reveals increased spend in APAC and EMEA).

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