CIR: 40G component and module market to hit $500M by 2012

MARCH 14, 2007 -- Telecommunications equipment manufacturers will purchase approximately $500 million worth of 40-Gbit/sec transponders and components by 2012, according to a new report from market research and industry analysis firm CIR.

MARCH 14, 2007 -- Telecommunications equipment manufacturers will purchase approximately $500 million worth of 40-Gbit/sec transponders and components by 2012, according to a new report from market research and industry analysis firm CIR (search for CIR).

Having run the gamut from over-hyped "next big thing" to dead and buried, in CIR's opinion, 40 Gbits/sec has once again emerged as a topic of conversation in the market. The difference today is that real deployments are beginning to happen and advances in technology and the availability of 40G transponders have made the topic into something worth considering. According to CIR's newest report, the market currently resides at the VSR (2 km) level with deployments mainly limited to core routers. While there have been announcements by some carriers -- including AT&T, Sprint, and SOFTBANK -- of plans to upgrade backbone networks to 40 Gbits/sec, CIR believes that industry-wide 40-Gbit/sec roll outs won't ramp up until 2010. Whether or not 40G achieves the market prominence of today's 10G remains to be seen -- but at a minimum that won't happen until at least 2015, CIR offers.

Nonetheless, CIR says 40G will find sizable markets much earlier than that and the escalation in the 40-Gbit/sec market will be driven by new technology enablers and cost improvements in addition to meeting bandwidth demands. The market research and analysis firm touts the emergence of advanced optical modulation schemes and improved dispersion compensation, both of which make 40-Gbit/sec transmission over existing networks a much more practical proposition, as the most important recent advances. Transmission at 40 Gbits/sec also offers operational advantages inherent in the technology in that most network engineers believe that routers work at a much higher rate of efficiency if bit streams remain intact rather than carried as several lower-rate channels, CIR reports. And 40 Gbits/sec, SONET provides this capability in a way that say Ethernet cannot match.

So far, many of the large component and module manufacturers such as JDSU, Avanex, Finisar, and Bookham have not entered the market but CIR expects that will change as volumes for 40-Gbit/sec ports rise into the tens of thousands. Modules and components firms are extremely affordable, in CIR's opinion, and it would not take much to acquire some of the smaller firms out there. Firms like Apogee, CoreOptics, Inphi, Kailight, Picometrix or Teraxion could be absorbed in the next two to three years, CIR believes.

CIR's new report, "The Transition to 40Gbits/sec," provides an assessment and forecast of 40 Gbits/sec technologies and market opportunities through 2012.

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