The market for 10-Gbit/sec electronic and optical components and modules is expected to net $856 million by 2008, contends a new report from CIR (Charlottesville, VA). The average annual growth rate for the sector will be around 16% for the 2004–08 period, which is a considerable improvement from the 8% expected for the 2002–04 period.
According to CIR, components and technology innovations are now the primary source of cost, performance, and functionality advantages for 10-Gbit/sec equipment vendors. These benefits are most likely to stem from improved packaging, better power consumption and thermal control, and enhanced manufacturing processes.
Components manufacturers that can demonstrate how their products will enable 10-Gbit/sec networks to have clear cost advantages over networks based on multiple lower-rate lines will quickly gain better margins and market share. Networking technologies have not usually taken off until they demonstrate about 10 times the performance of the next-lowest-speed technology for about one-third the cost, and 10-Gbit/sec technologies have not yet achieved that.
Integration can be a differentiating feature and help hold down costs, say CIR analysts, but such integration must be oriented toward market needs. With integrated modules, there is a danger that the customer will incorporate the same functionality twice and actually drive up costs. Also, customers have not usually bought processors and framers/mappers, for example, from the same company. So where processing power is integrated into transmission electronics, component selection becomes a much bigger decision for the customer. This factor complicates the marketing and sales process for the chip maker.
By 2008, WDM-related optics and electronics will represent almost two-thirds of the 10-Gbit/sec market, predicts the report, because WDM systems are more likely to operate at 10 Gbits/sec than SONET/SDH or Ethernet systems.
For more information about the report, "The Market at 10 Gbits/sec: A Value Chain Analysis," visit www.cir-inc.com.