3Q17 Optical Hardware Forecast

On November 21st, Cignal AI issued full optical equipment market share analysis for 3rd quarter 2017 (3Q17). This second report extends our analysis and summarizes forecasts and outlooks for the industry through 2021.

Subscribers to the Optical Hardware Report are able to download an excel file with actual results through 3Q17 along with detailed, up-to-date forecasts. A complete compilation of our 3Q17 market share and forecast analysis is available in both web format as well as .pdf format.

 

We made minor adjustments to our worldwide 2018 and longer-term forecasts; a detailed discussion follows.

Requires Optical Hardware subscription.

3Q17 Optical Hardware Results

Cignal AI has released its 3rd quarter 2017 (3Q17) optical hardware market share analysis, which includes a summary of revenue results for the quarter.

Summary

Global spending on optical network equipment dropped for a third consecutive quarter, led by a larger than normal seasonal decline in China and weakening trends in EMEA.

  • North American spending increased again quarter-over-quarter, with positive results reported by most vendors.  Spending on Metro WDM continues to grow at the expense of LH WDM.
  • EMEA revenue fell sharply though this was the result of weakness at larger vendors – smaller vendors performed better. As in North America, LH WDM bore the brunt of the decline.
  • Last quarter was the weakest YoY revenue growth recorded in China in over 4 years as momentum from 2Q17 spending failed to continue into the third quarter. Spending trends in the region remain difficult to predict.
  • Revenue in the rest of Asia (RoAPAC) eased following breakout results in India during 2Q17 though spending remains at historically high levels.
  • Quarterly coherent 100G+ port shipments broke 100k units for the first time on a global basis. 100G+ Port shipments in China were flat QoQ and are substantially up YoY

Subscribers to the Optical Hardware report can download an excel file with actual results through 3Q17. This Excel file contains only historical data, and is an interim release. A file with greater detail, including updated forecasts and additional analysis, will be available by November 27th, 2017.

Analysis of the market and its participants during 3Q17 follows.
Requires Optical Hardware subscription.

Analysis: 1H17 Cloud and Colo Spending Slowdown

Cignal AI’s recent Optical Customer Markets Report discovered an unexpected weakness in 2017 optical transport equipment spending from cloud & colo operators (see Cignal AI Reports Unexpected Drop in Cloud and Colo Spending). This surprising trend was then further supported by public comments later made by Juniper and Applied Optoelectronics, prompting us to examine the situation in greater detail.

This detailed brief includes:

  • Cloud & colo spending as defined by Cignal AI
  • Analysis of quarterly spending trends by cloud & colo operators
  • Recent shifts in market share among equipment vendors to this market
  • Quantitative analysis of underlying causes of this slowing, including price compression and displacement by IPoDWDM via Inphi, Acacia, and Oclaro components

Requires Optical Customer Markets subscription.

ECOC 2017 – China Observations

This is Cignal AI’s second ECOC 2018 brief, focused on news out of China.

Topics include:

  • China Inventory and 2018 Demand
  • Ciena Wavelogic AI Licensing Update
  • China ROADM Deployment Outlook
  • Huawei 100G+ Coherent Technology Roadmap

Our first brief, issued on October 3rd, focused on coherent 100G+ technology updates.

Requires Optical Active Insight subscription.

ECOC 2017 Market Focus Presentation

Andrew Schmitt’s presentation, entitled “Mapping the Future of Optical Deployments,” was one of several featured during this years ECOC Market Focus sessions in Gothenburg, Sweden September 18-20th.

The presentation highlights Cignal AI’s perspective on how different sectors of the market increasingly demand more specialized solutions. It also highlights the weaknesses of the much-discussed “Optical Whitebox” as well as the strengths and weaknesses of hardware disaggregation. Finally, we warn those in the industry to beware of The Cult of Open.

Subscription not required – register an account with a corporate email address to read the summary and download the presentation.

Powerpoint (.ppt)

 

Requires Optical Active Insight subscription.

1H17 Optical Customer Markets Report

We’ve released the 1H17 edition of the Optical Customer Markets report. It provides insight into how much optical equipment different segments of network operators purchase:

  • Covers 4 global regions and five end customer types
  • Tracks shipments to Incumbent, Wholesale, Cloud & Colo (Datacenter), Cable MSO & Broadband, Enterprise & Government customers
  • Forecasts by region and category
  • Vendor market share for equipment sales to Cloud and Colo (Datacenter) customers
  • Follows strict methodology to reduce analyst subjectivity

Notable updates include:

  • Updated results for 1H17
  • Vendor market share of equipment sales to Cloud and Colo customers for 1H17
  • Updated PowerPoint report summary

Subscribers can download the latest Excel and PowerPoint files.

Report Details Excel PowerPoint

ECOC2017 – Coherent 100G+

ECOC is one of the most significant conferences in optical networking worldwide. This year’s conference was held in Gothenburg, Sweden, and the event was well attended by the engineering community, as the conference trends heavy on technology and light on marketing. We at Cignal AI like ECOC because it gives us another opportunity to converse with the folks directly responsible for charting the technical roadmap of upcoming optical systems.

In this first of several ECOC briefs, we share some of our findings on the changing trends in coherent optics. Subsequent briefs will explore China and client optics.

  • CFP2-ACO Outlook – The ACO market is going away; what this means
  • Silicon Photonics – Searching for the killer app
  • Inphi ColorZ – Moving downmarket to grow volume
  • 400G ZR – Examining investment risk and rewards
  • Acacia CFP2-DCO – Market Feedback

Requires Optical Active Insight subscription.

1H17 Optical Applications Report

Our 1H17 edition of the Optical Hardware Applications report has been released.

The report contains details on the following areas:

  • Compact Modular hardware market share and forecasts
  • 100G+ Coherent port shipments vendor market share
  • 100G, 200G, and 400G+ Coherent and Direct Detect port shipments and forecast
  • Advanced Packet-OTN Switching market share and forecasts

This report includes significant updates and enhancements:

  • Initiated a coherent 400G port shipment forecast, estimating demand for 400G wavelengths in CY17 and beyond, including the upcoming 400G ZR pluggable format. The forecast also quantifies the emergence of coherent 100G in volume at the edge of the optical network. A more detailed written analysis sharing the assumptions behind this forecast will be published in the coming weeks. In the meantime, we welcome feedback on the quantitative forecast.
  • Renamed DCI Hardware category to “Compact Modular”. DCI is an application, not a hardware category, and these compact, modular chassis are being used in several applications, including DCI. As Incumbent, Cable MSO, and Wholesale operators evaluate and deploy these systems it is important that this category name better reflect the defining characteristics of these systems. A listing of the specific systems in this category can be found here.
  • Added 1H17 market share results for Compact Modular and Advanced Packet-OTN Switching equipment hardware. Also updated coherent port shipment market share to include vendor results for 1H17.
  • Compact Modular hardware forecast increased in 2017 and 2018 as result of discussions with vendors. This is a bottoms-up change with the risk that multiple vendors are double-counting the same opportunities.
  • Historical 100G+ Port Shipments adjusted to align with actual customer shipment data.

Current subscribers can download Excel and PowerPoint files.

Report Details Excel PowerPoint

2Q17 Optical Hardware Forecast

On August 20th, Cignal AI issued full optical equipment market share analysis for 2nd quarter 2017 (2Q17). This second report extends our analysis and summarizes forecasts and outlooks for the industry through 2021.

Subscribers to the Optical Hardware Report are able to download an excel file with actual results through 2Q17 along with detailed, up-to-date forecasts. A complete compilation of our 2Q17 market share and forecast analysis is available in both web format as well as .pdf format.

Excel PDF

 

We made substantial adjustments to our worldwide 2017 forecasts due to ongoing spending weakness in North America and EMEA as well as surprising strength in China; a detailed discussion follows.

Requires Optical Hardware subscription.

2Q17 Optical Hardware Results

Cignal AI has released its 2nd quarter 2017 (2Q17) optical hardware market share analysis, which includes a summary of revenue results for the quarter.

Summary

Global spending on optical network equipment increased slightly, led by increased spending in China and India.

  • Optical revenue in China is up 13 percent for the first half of 2017 as compared to the same period in 2016. The weak demand reported by component makers is a result of an ongoing inventory correction (primarily at Huawei), rather than a signal of weak end market demand.
  • Huawei and ZTE both reported record shipments of 100G coherent ports in China during the quarter. The companies also showed strong revenue performance in the region.
  • North American spending increased quarter-over-quarter. Consistent with earlier Cignal AI forecasts, North America is experiencing a shift in spending from long haul to metro WDM. Ciena and Cisco are the primary beneficiaries of the double-digit year-over-year growth in NA metro WDM. Both companies grew market share, and Ciena’s North American optical equipment revenue increased by 21 percent year-over-year.
  • Outside of China and Japan, the rest of the Asia Pacific (ROAPAC) countries experienced 20 percent year-over-year growth. This region’s growth was particularly fueled by India’s Reliance Jio, which is purchasing substantial amounts of equipment from Ciena and Nokia as part of an aggressive 4G LTE expansion in the country.
  • EMEA revenue dropped substantially, stemming from sharp declines in spending in the long haul WDM and submarine systems markets. Metro WDM spending remained flat year-over-year.
  • Growth in metro WDM spending is creating greater demand for higher speed coherent ports, which are evolving from 200G to speeds as high as 400G later this year.

Subscribers to the Optical Hardware report can download an excel file with actual results through 2Q17. This Excel file contains only historical data, and is an interim release. A file with greater detail, including updated forecasts and additional analysis, will be available August 25th, 2017.

Report Details Excel

Analysis of the market and its participants during 2Q17 follows.
Requires Optical Hardware subscription.

China ROADM Deployment Outlook

After much of the world already transitioned to all-optically switched ROADM networks, Chinese network operators are preparing to follow suit. Most networks outside of China used optical switching as early as a decade ago, yet China chose to deploy massive electrical OTN switches instead, powered by technology from Huawei and ZTE. But now the writing’s on the wall; electrical switching can no longer scale to the sizes needed by China Mobile and China Telecom, and these operators are now moving forward with ROADM optical switching.

This transition will unfold with a different timeline than Cignal AI initially anticipated and we have updated our position on China’s 2017 ROADM deployment. Instead of pursing rapid deployment, Chinese operators will take a more conservative stand by minimizing the deployment of conventional ROADM architectures during 2017 and 2018.

In this report, Cignal AI examines what technology China has deployed to date, outlines changes in ROADM architectures, and explores the ripple impact on the optical component and semiconductor supply chain.
Requires Optical Active Insight subscription.

1Q17 Optical Hardware Forecast

On June 15th, Cignal AI issued full optical equipment market share analysis for 1st quarter 2017 (1Q17). This second report extends our analysis and summarizes forecasts and outlooks for the industry through 2021.

Subscribers to the Optical Hardware Report are able to download an excel file with actual results through 1Q17 along with detailed, up-to-date forecasts. A compilation of our latest analysis is also available in both web format as well as .pdf.

Excel PDF

 

We made some material adjustments to our forecasts for 2017 in North America and China; a detailed discussion follows.

Requires Optical Hardware subscription.

Next Gen Optical Networking 2017

Andrew Schmitt’s keynote presentation, entitled “Ways to Achieve Network Openness“, kicked off the 2017 Next Gen Optical Networking event in Nice, France on June 20th. The presentation, which highlights Cignal AI’s perspective on the various directions network operators can take as they deploy networks in the near term, was also given at a Huawei event prior to the show.

Powerpoint (.pdf)

Register an account with your corporate email address to read the article and download the presentation.

Requires Optical Active Insight subscription.

1Q17 Optical Hardware Results

Cignal AI has released its 1st quarter 2017 (1Q17) optical hardware market share analysis, which includes a summary of revenue results for the quarter.

Summary

Global spending on optical network equipment eased worldwide, led by a double digit decline in North America.

  • Ciena remains the best performing company in North America (NA) as it remained immune to sharp pullbacks in long haul WDM (LH WDM) spending. NA spending continues to stall as a result of a technology transition from long haul to metro WDM capex, as well as materially lower results from Infinera – the second largest vendor in the region.
  • European (EMEA) spending was weaker although some vendors reported good results compared with 1Q16.
  • Optical equipment spending growth in China stalled as uncertainty about the outlook for 2017 rippled through the industry. Huawei remains very confident growth will return in 2H17 but its component suppliers grow increasingly negative as they receive mixed messages from the supply chain.
  • Metro WDM growth has yet to appear in order to offset sharp declines in LH WDM spending. This will change in 2017 as multiple vendors bring the technology to market. Coriant, Infinera, and Nokia have been impacted by this trend.
  • Subscribers to the Optical Hardware report can download an excel file with actual results through 1Q17. This Excel file contains only historical data, and it is an interim release. A subsequent file with updated forecasts and additional analysis will be available June 19, 2017.
Report Details Excel

Detailed analysis of the market and its participants during 1Q17 follows.
Requires Optical Hardware subscription.

2H16 Optical Customer Markets Report

Our 2H16 edition of the Optical Customer Markets report has been released.

The report provides insight into how much optical equipment specific network operators purchase:

  • Covers 4 global regions and five end customer types
  • Tracks shipments to Incumbent, Wholesale, Cloud & Colo (Datacenter), Cable MSO & Broadband, Enterprise & Government customers
  • Forecasts by region and category
  • Vendor market share for equipment sales to Cloud and Colo (Datacenter) customers
  • Follows strict methodology to reduce analyst subjectivity

Notable updates include:

  • Full year results for 2016
  • Report is enhanced with global vendor market share of equipment sales to Cloud and Colo customers
  • All forecasts extended through 2021
  • Added PowerPoint report summary

Subscribers can download Excel and PowerPoint files, and registered users can view updated report information.

Report Details Excel PowerPoint