Executive Summary
Pluggable transceivers are transforming optical transport and steadily replacing embedded optics. Hyperscalers created this trend with IP-over-DWDM using 400ZRx pluggables, leading to high volumes, low cost, and near performance parity with non-pluggable solutions. Pluggable transponders extend these benefits to traditional optical transport hardware and Service Provider operational practices.
The upcoming deployment of 800ZR/ZR+ optics will accelerate adoption. Host interoperability could disrupt vendor revenue models by allowing any pluggable to work in any host. Pluggable transponders can be used to augment IP-over-DWDM networks and are ideal for DCI applications due to their low power and high density. By using standardized, modular hardware, pluggable transponders democratize coherent technology which fosters competition in a consolidating market.
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An optical transport system fundamentally has two functions; to modulate client data into signals suitable for long distance transmission, and to multiplex and transport each of these signals over a single fiber (it all happens in reverse, too). The first function is accomplished by a DWDM transceiver; the latter by a Line System. Line Systems have evolved over the past 30 years, but it’s the advancement of modulation, implemented within the transceiver, that has pushed fiber capacity to near its theoretical maximum. Transceivers also form the heart of the optical market – they’re historically responsible for at least two-thirds of optical transport hardware revenue, and their constant innovation has defined the market’s winners and losers.
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