Ovum-RHK expects global datacom optical component sales to grow at an 11% compound annual growth rate (CAGR) from $728 million in 2005 to $1.34 billion in 2011. According to the firm, Ethernet transceivers will lead the market growth, with the LAN market transitioning from 1- to 10-Gbit/sec products, and Fibre Channel (FC) transceivers in the storage market transitioning to 4-Gbit/sec and then to 8-Gbit/sec products.

Although 10-Gigabit Ethernet switch ports are shipping today, the firm says that real deployments of “the most attractive opportunity” over the long run-i.e., covering spans of 300 m on legacy multimode fiber-will not begin until 2008. This subsegment will continue to grow substantially even after 2011, forecasts the firm. Further, Ovum-RHK projects that volume shipments of FC transceivers at 8 Gbits/sec will not begin until 2009.

These opportunities notwithstanding, the firm says that optical component vendors for datacom will be “challenged with providing cost-effective products that meet the market demand.”

“While the market demand for higher-data-rate transceivers presents excellent revenue opportunities for component suppliers, I am worried that the challenging cost requirements create unhealthy financial positions for suppliers,” warns Daryl Inniss, vice president of Ovum-RHK’s optical components practice. “Furthermore, the market needs to define a form factor that gives vendors the opportunity to recoup the research and development invested to produce the high-data-rate transceivers.”

Details of Ovum-RHK’s annual datacom forecast and additional analysis are published by the firm’s optical components advisory service, which covers the global WDM, SONET/SDH, datacom (Fibre Channel and Ethernet), and access optical component markets. For more information, visit www.ovum.com.