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.

Cignal AI Reports Unexpected Drop in Cloud and Colo Provider Spending

Optical Customer Market Report Finds Ciena and Cisco Outperforming Peers in Cloud & Colo Market

BOSTON – October 12, 2017 – Spending on optical transport equipment by cloud and colocation providers dropped unexpectedly year-over-year, according to the most recent Optical Customer Markets Report issued by networking component and equipment market research firm Cignal AI. The surprising reversal in spending by Amazon, Facebook and Google is a result of aggressive price declines in the equipment market, the deflationary effects of 200G technology and more focus by cloud/colo providers on building inside the data center rather than between locations.

Market Share Gains/Losses YoY by Vendor

“The slow down in cloud and colo provider spending has been a surprise to equipment and component manufacturers, particularly since all forecasts for this market had anticipated continued growth,” said Andrew Schmitt, lead analyst at Cignal AI. “The supply chain is feeling an impact already, but once these 200G pricing reductions are digested in the market, spending will again be on the rise.”

Produced twice a year, Cignal AI’s Optical Customer Markets Report quantifies optical equipment spending by five key customer markets – incumbent, wholesale, cable MSO, cloud and colo, and enterprise and government. The current report covers spending through 1H17 and includes forecasts based on expected spending trends by customer market on a regional basis. The report also details equipment vendor market share for sales directly to the cloud and colo market.

Additional key findings in the 1H17 Optical Customer Markets Report include:

  • Ciena and Cisco are significantly outperforming their peers in sales to the cloud and colo market, even in the current challenging environment. Their gains reflect losses at ADVA, Infinera and Nokia.
  • Spending by incumbent operators in North America is durable and has remained consistent year-over-year.
  • Chinese cloud and colo spending is still very low as a percentage of total sales. This is attributable to regulatory issues, which prevent companies like Baidu, Alibaba and Tencent from building their own networks.

About the Optical Customer Markets Report

The Cignal AI Optical Customer Markets Report tracks optical equipment spending by end customer market type and provides forecasts based on expected spending trends by customer market on a regional basis. Deliverables include Excel file with complete data set, PowerPoint summary and Optical Equipment Active Insight.

The report includes revenue-based market size for all end customer markets across all regions, with market share for the cloud and colo segment broken out on a worldwide basis. Vendors examined include Adtran, ADVA, Ciena, Cisco, Coriant, Cyan, ECI, Ekinops, Fiberhome, Fujitsu Networks, Huawei, Infinera, Juniper Networks, NEC, Nokia, Padtec, TE Conn, Transmode, Xtera and ZTE.

Full report details, as well as other articles and presentations, are available to users who register for a free account on the Cignal AI website. If you have questions or are interested in purchasing the report, please contact us.

About Cignal AI
Cignal AI provides active and insightful market research for the networking component and equipment market and the market’s end customers. Our work blends expertise from a variety of disciplines to create a uniquely informed perspective on the evolution of networking communications.

Contact Us/Purchase Report
Sales: +1 617-603-0750
Web: Contact us
Link to press release

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 or 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 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:

  • 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.

Inphi samples 16nm Polaris™ PAM4 DSP Product Family with Integrated EML and VCSEL Driver

Inphi announces samples of its latest Polaris PAM-4 DSP for inside the data center which. This is the PAM-4 engine that powers optical modules such as 200G QSFP28s and 400G CFP8s running FR8 signaling. The chip also integrates both single and multi-mode laser drivers, further reducing cost.

“Cloud operators are looking for every possible edge to reduce the cost of short reach optical connectivity. Inphi and its Polaris platform play a critical role in cutting the cost of 100G and making 400G an economically viable technology,” said Andrew Schmitt, founder and lead analyst at Cignal AI.

Semtech and Multiphy Demonstrate Single Lambda 100G Chipset for the Datacenter

Semtech and Multiphydemonstrate a single-lambda 100G solution at ECOC for DR4 modulation in a QSFP28. This included a single channel PAM-4 DSP from Multiphy, and modulator driver and TIA from Semtech.

“Single wavelength 100G is the ultimate solution for 100G in the data center, offering four times of fundamental cost improvement over existing 4x25Gbps solutions. This will be the preferred technology for high-volume applications in Cloud and colocation data centers,” said Andrew Schmitt, Founder at Cignal AI. “This new 100G chipset provides performance of greater than 2 km, effectively meeting all single mode needs for next-generation hyper-scale data centers.”

Cignal AI Issues Industry’s First Forecast for 400G Coherent WDM Shipments

Optical Applications Report Reveals Market Share for Coherent 100G Shipments and Rapid Growth in Compact Modular equipment for Second Half of 2017

BOSTON (September 18, 2017) – Cignal AI, a networking component and equipment market research firm, issued the industry’s first comprehensive analysis measuring the anticipated growth of coherent 400G WDM.  Forecasts in its recent Optical Applications Report estimate that this technology will account for almost one-quarter of all deployed WDM bandwidth in 2020. The Applications Report also predicts that revenue for equipment originally designed for the data center interconnect (DCI) market will reach $1 billion by 2019, as these systems become widely adopted outside of traditional DCI applications.

“Cignal AI has close relationships with equipment and component manufacturers, as well as end users, and these relationships give us a unique insight into the optical equipment market.  From this vantage point, we can forecast emerging technologies such as coherent 400G WDM usage,” states Andrew Schmitt, lead analyst for Cignal AI. “Pluggable 400G ZR modules should enter the market by 2019, and they will be the final nail in the coffin for 10G WDM networks.”

Produced twice a year, the Optical Applications Report examines market share through the first half of 2017 and provides forecasts in three key markets: 100G+ coherent WDM, compact modular equipment used for DCI and advanced packet-OTN switching hardware. Key findings in the report include:

100G+ Coherent WDM

  • 400G coherent WDM volume starts to ramp this year, led by Ciena deployments and then followed by other suppliers six to nine months later.
  • The introduction of small form factor 100G and 400G pluggable models will spur the largest optical market transformation since the “Optical Reboot” of 2012-2015 by virtually eliminating most 10G WDM deployments from the world’s optical infrastructure.
  • Both 100G and 400G coherent will be widely adopted at the edge of the network by the end of 2021.
  • Cisco is growing 100G port deployments faster than all other vendors in the market.
  • Despite widespread expectations to the contrary, Chinese coherent 100G port deployments grew at a healthy pace in the first half of 2017.

Compact Modular Equipment

  • Equipment originally designed for DCI applications is rapidly evolving into applications outside the datacenter. Incumbent, wholesale and cable operators will adopt these stackable systems with open software models to build disaggregated optical networks. Using “DCI” – which is an application – to classify an equipment type no longer makes sense. Cignal AI has changed its category name and definition appropriately to “Compact Modular”
  • Spending on compact modular equipment more than tripled in the first half of 2017, compared to the same period last year. Ciena, Cisco, and Infinera are the market share and technology leaders for this sector.

Advanced Packet-OTN Switching

  • Large incumbent operators continue to grow deployment of these systems. Despite its complexity, advanced packet-OTN switching remains the best approach for unifying many customers and applications on a single transport infrastructure.
  • Revenue for packet-OTN systems grew in the double digits in the first half of 2017, compared to the same period last year.
  • Verizon’s deployment of these systems is increasing and will affect vendor market share more materially in the second half of 2017.

About the Optical Applications Report

The Cignal AI Optical Applications Report includes market share and forecasts for revenue and port shipments for optical equipment designed to meet the needs of specific applications: 100G+ coherent, compact modular and advanced packet-optical switching hardware. Deliverables include Excel file with complete data set, PowerPoint summary and Optical Equipment Active Insight.

The report features revenue-based market size and share for the hardware categories and detailed port-based market size and vendor market share for 100G+ shipments. Vendors examined include Acacia, Adtran, ADVA Optical Networking, Ciena, Cisco, Coriant, ECI Telecom, Fujitsu, Huawei, Infinera, Inphi, NTT Electronics (NEL), Nokia and ZTE.

Link to press release

Full report details, as well as articles and presentations, are available to users who register for a free account on the Cignal AI website. If you have questions or are interested in purchasing the report, please contact us.

About Cignal AI

Cignal AI provides active and insightful market research for the networking component and equipment market and the market’s end customers. Our work blends expertise from a variety of disciplines to create a uniquely informed perspective on the evolution of networking communications.

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.

Cignal AI Report Examines Growing Demand for Optical Equipment in China

Quarterly Optical Hardware Report Details Record Shipments of 100G Coherent Ports and North American Market Share Growth for Ciena and Cisco

BOSTON (August 21st, 2017) – Despite concerns from component makers, China’s optical hardware market continues to grow, according to the second quarter Optical Hardware Report from Cignal AI, a networking component and equipment market research firm. The report also provides insights on increasing demand for optical equipment in North America and India, resulting from a shift to metro WDM. Conversely, the report details declines in spending across the EMEA region.

“Demand for optical hardware in China is not slowing down, and equipment vendors are universally providing positive guidance for North America during the second half of the year,” said Andrew Schmitt, lead analyst for Cignal AI. “Operators around the world are shifting spending from long haul to metro WDM, though this shift is materializing into gains for only a few vendors.”

The Optical Hardware Report is issued quarterly and examines optical equipment revenue across all regions and equipment types, including shipment information and guidance from individual equipment companies. Forecasts are based on spending trends in each region and the equipment types within those regions.

Key report findings include:

  • 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.
About the Optical Hardware Report

The Cignal AI Optical Hardware report includes market share and forecasts for optical transport hardware used in optical networks worldwide. Deliverables include an Excel database and PowerPoint summaries, plus our continuously published real-time news briefs, Active Insight. The report analyzes and quantifies revenue for metro WDM, long haul WDM and submarine (SLTE) equipment in six global regions, and includes detailed port shipments by speed. Vendors examined include Adtran, ADVA Optical Networking, Ciena, Cisco, Coriant, ECI Telecom, Ekinops, Fiberhome, Fujitsu, Huawei, Infinera, Juniper (BTI Systems), NEC, Nokia, Padtec, TE Connectivity, Xtera and ZTE.

Full report details, as well as free articles and presentations, are available to users who register for a free account on the Cignal AI website.

Link to press release

About Cignal AI

Cignal AI provides active and insightful market research for the networking component and equipment market and the market’s end customers. Our work blends expertise from a variety of disciplines to create a uniquely informed perspective on the evolution of networking communications.

Contact Us/Purchase Report

Sales: +1 617-603-0750

Web: Contact us

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.

Infinera Delivers Industry-leading 19 Terabits of Capacity on Trans-Atlantic Route

Infinera completed a trans-Atlantic field trial with it’s new XTS-3300, slightly edging out the performance of previous announcements by Ciena and Nokia for trans-Atlantic links.

While optical vendors have demonstrated experimental approaches to boost subsea fiber capacity, the Infinera XTS-3300 is the first commercial platform that can deliver over 19T of capacity on a trans-Atlantic route,” said Andrew Schmitt, Lead Analyst at Cignal AI. “The XTS-3300 trial used tighter channel spacing and advanced compensation techniques in the DSP, paving the way for operators to deploy highly efficient platforms that maximize subsea fiber spectrum utilization.

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.