Infonetics: Systems vendors’ in-house work tips 40G, 100G optical transceiver market

NOVEMBER 1, 2010 -- Much has been made of the fact that systems vendors will rely on in-house expertise for the first generation of serial 100-Gbps technology. In its newly updated 10G/40G/100G Optical Transceivers Market Size and Forecast,market research firm Infonetics Research says that this factor will significantly curtail the revenue opportunity for independent 40G/100G module vendors.

Within the report, Infonetics Research increased its forecast for the combined 10G, 40G, and 100G transceiver and transponder market, expecting it to grow to $2.14 billion worldwide in 2014. Within the 40G/100G realm, equipment vendors who offer 100G technology first will take the majority of long-term revenue as well as more 40G contracts, Infonetics asserts. This is because carriers are making vendor decisions based on a dual evaluation of 40G and 100G technology.

"Network equipment manufacturers -- such as Alcatel-Lucent, Ciena, Cisco, Huawei, and Infinera -- are supplying an increasing share of 40G long-reach ports and will ship most of the 100G ports through 2014, posing a competitive challenge to component suppliers in the market,” states Andrew Schmitt, Infonetics Research's directing analyst for optical. “The reality of this market requires that optical component vendors measure twice and cut once when making investments in this area or face a negative ROI."

Other optical transceiver market highlights Infonetics cites include:

• An increase in WDM equipment spending by carriers around the world resulted in rapid revenue growth for colored optical interfaces in the first half of 2010.
• Pluggable tunable transceivers in the XFP format, already popular in ROADM-based networks, allow carriers to add tunability to a wider range of devices -- including IP/Ethernet edge switches and routers, and eventually CMTS head-ends, FTTH OLTs, and DSLAMs. The tunable XFP transceiver market is forecast to grow at a 117% compound annual growth rate (CAGR) from 2009 to 2014.
• Infonetics expects 10G SFP+ transceiver revenue to more than double and unit shipments to more than triple from 2010 to 2014, led by modules for 10 Gigabit Ethernet (10GbE) and 8G and 16G Fibre Channel applications
• The shift to more compact form factors with fewer electronics (SFP+ and XFP) and lower cost designs will rapidly push down unit pricing for 10G components, resulting in flat revenue on increasing volume
• The ramp-up of 100G technology is expected to be faster than that of 40G, particularly when 100G coherent PM-QPSK becomes available at a cost no more than double that of 40G coherent PM-QPSK, and when lower cost LR-4 modules hit the market (2011 to 2013).

Infonetics' 10G/40G/100G Optical Transceivers report is designed to provide in-depth analysis, market size, and forecasts through 2014 for manufacturer revenue and units shipped. The report analyzes the market by module, reach, wavelength, and form factor. The report is the first to use end-market projections of carrier preferences and equipment shipments to drive component forecasts, Infonetics asserts. These forecasts include shipments of 40G and 100G ports designed and manufactured in-house by network equipment manufacturers (NEMs).

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