Executive Forum panel dissects 40G/100G market dynamics

MARCH 22, 2010 By Stephen Hardy -- A panel of senior executives at components and subsystem suppliers assembled today as part of the 11th Annual Executive Forum, co-presented by the Optical Society of America and Lightwave, proved to be a fairly agreeable group. The panelists agreed that there will still be significant demand for 40 Gbps on both the client and line sides of the network once 100-Gbps technology arrives. They agreed that the development of dual-polarization quadrature phase-shift keying (DP-QPSK) with coherent detection for 100-Gbps applications was very expensive. And finally they agreed that the market for 100G technology wouldn’t be big enough to support every player already pursing the opportunity, let alone any newcomers.

The panelists included companies involved on both the line and client side of the network, from IC developers to component and module vendors. They included:

Gilles Bouchard, president and CEO, Opnext
Philip Gadd, vice president and general manager, Fiber Optics Products Division, Avago Technologies
Javed Patel, senior vice president and general manger, Transport and Data Business Unit, Semtech
Jerry S. Rawls, executive chairman, Finisar
Terry F. Unter, president and CEO, Mintera Corp.

Having heard Dana Cooperson, vice president and practice leader, network infrastructure at Ovum Inc., predict in a previous panel that 40G and 100G on the line side will enjoy a 79% compound annual growth rate (CAGR) from 2008 to 2014 -- but from a relatively small starting point -- the panelist marveled at how many companies had already lined up to chase what appeared to be a small amount of business. For example, Rawls said that he had heard that at least eight companies or organizations were attempting to build ASICs for the complex requirements of coherent detection at 100 Gbps. And multiple panelists said they were aware of startups receiving funding to embark on similar pursuits.

However, when asked how many subsystem players the 100G market would likely support in the foreseeable future, the panelists were unanimous in predicting the number was no larger than three or four. Clearly, they concluded, several companies were now making a significant investment in a losing proposition. Asked if the level of investment in 100G was great enough to sink a company if it didn’t gain market traction, the panelists said no -- although Rawls suggested that a few executives likely would lose their jobs for spending a large number of R&D dollars fruitlessly.

While the 100G market sorts itself out (and even afterwards), there is money to be made in 40G, the panelists said confidently. On the client side, 40-Gigabit Ethernet should enjoy traction as the most economical next step from 10-Gigabit Ethernet, Gadd said. Similarly, while 100-Gbps systems based on DP-QPSK are now commercially available, they remain expensive -- thus leaving the door open for 40G, panelists said. Unter and others said that adapting coherent receiver technology for 40 Gbps makes sense; in fact, his company has such a module on the roadmap for introduction this year. (Other companies are already offering such modules or are incorporating the technology into their systems; see “Fujitsu adds coherent 40G to FLASHWAVE 7500 ROADM,""CoreOptics, EXFO demonstrate 40G error-free traffic on CP-QPSK transponder with coherent detection," and "Nokia Siemens Networks delivers platform for rapid, cost-effective optical migration to 40G.”) While the current generation of technology based on modulation formats such as differential PSK (DPSK) do a good job for many 40G applications, they can’t match the ability of coherent detection to mitigate the effects of polarization mode dispersion, Unter said.

And while the commercialization of such technology would add a few more letters to the alphabet soup of modulation formats offered at 40G, Patel said it’s likely more will come. He pointed to orthogonal frequency-division multiplexing (OFDM) as one format that might see commercialization.