ADVA – Cignal AI

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

2H16 Optical Applications Report

Our 2H16 edition of the Optical Hardware Applications report has been released.

The report contains details on the following markets:

Datacenter Interconnect Hardware market share and forecasts
100G+ Coherent port shipments and market share
100G+ Metro and edge port shipments and forecast
100G+ Port shipments and forecast by speed & technology
Advanced Switching Hardware market share and forecasts

Notable updates include:

Full year market share results for 2016 including all hardware categories as well as updated coherent port shipment data
DCI hardware forecast increased as a result of accelerating adoption outside of Cloud & Colo customers
Forecasts for 100G and 200G+ metro and edge coherent ports adjusted
All forecasts extended through 2021

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

Report Details Excel PowerPoint

OFC 2017 – Open vs. Closed Optical Networks

There was a new cult this year at OFC, the ‘Cult of Open.’ It formed from rising sentiment that the lack of interoperability of vendors in optical networks is a major problem and that the industry needs to embrace hardware dis-aggregation.

This is not a bad cult – it ignited a healthy debate that illuminates both the positive and negative aspects of open networks and closed single-vendor networks. But some members of the Cult of Open overlook an inconvenient truth – closed networks from one vertically integrated vendor can vastly outperform open networks in some cases. Cignal AI’s key takeaways concerning open optical networks and hardware dis-aggregation include:

Facebook’s Voyager Platform
Open ROADM and Line Systems
Benefits of Vertical Integration

Requires Optical Active Insight subscription.

OFC 2017 – Coherent Technology

400G Coherent and Beyond
Ciena had a blockbuster announcement at OFC 2017, but there was plenty of other interesting news to feast on. Cignal AI’s key takeaways concerning coherent WDM include:

The outlook for 200G and CFP2-ACO volumes in 2017
Opinions on Ciena WaveLogic Ai Licensing
The roadmap review for 400G/600G & Acacia Pico
Sizing the risk and reward for the 400G ZR market

Requires Optical Active Insight subscription.

Investor Call – OFC 2017 Takeaways

Andrew Schmitt provided key OFC 2017 takeaways during an investor call hosted by Troy Jensen of Piper Jaffray. Sixty-seven investors participated. Topics of interest included:

Impact of Ciena’s Wavelogic AI DSP Licensing
Outlook for Coherent Port Shipments in China During 2017
Market Outlook for CFP2-ACO/DCO and QSFP28 Markets
Potential Vertical Integration by Intel or InPhi
Timing of Metro Coherent and ROADM deployment in China
Chinese SARFT Capex Guidance
Roadmap for 400G and 600G Coherent
Observations on Infinera, Ciena, Acacia, Oclaro, and Neophotonics

Following is a summary of the key takeaways, as well as a full transcript of the discussion. Cignal AI clients can also listen to an audio replay.
Requires Optical Active Insight subscription.

4Q16 Optical Hardware Forecast

On February 27th, Cignal AI issued full optical equipment market share analysis for 4th quarter 2016 (4Q16). This second report, issued on March 9th, 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 4Q16 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

There were some minor changes to our forecast during 4Q16:

Updated LH v Metro WDM mix in Japan to adjust for 100G rollout
Adjusted SLTE forecast to moderate declines in later years
Slight changes to EMEA and NA for 2017 based on CY16 results.

A detailed discussion of our near and long term forecasts follows.

Requires Optical Hardware subscription.

4Q16 Optical Hardware Results

Cignal AI has released its 4th quarter 2016 (4Q16) optical hardware market share analysis, which includes a summary of revenue results for the quarter as well as the entire calendar year 2016 (CY16).

Summary

Global spending on optical network equipment increased in all global regions except North America during CY16.

Nokia and ADVA were the only vendors recording significant gains in North America in a challenging 2016 environment as growth in Cloud and Colo spending failed to offset decreases in Incumbent capex. Overall, NA spending stalled in the face of the beginning of the transition from long haul to metro WDM capex.
Huawei drove EMEA’s modest annual spending growth in 2016, as its strong performance in this region masked the decline in revenue experienced by other equipment vendors.
Optical equipment spending in China – led by Huawei – increased dramatically. Deployment of coherent 100G ports doubled from that of the previous year. 2017 heralds even more rapid change, as Huawei and ZTE use new component technologies and the deployment of 100G moves to the regional level.
Outside of China, Ciena and Nokia outperformed their peers by leveraging leading edge 200G technology and tightly integrated supply chains. ADVA benefited from a wave of Cloud and Colo spending but now must face the uncertain revenue cycles that are characteristic of these customers. Infinera is scrambling to complete a critical product cycle while Fujitsu and Coriant navigate product and market transitions.
Subscribers to the Optical Hardware report can download an excel file with actual results through 4Q16. 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 March 3, 2017.

Report Details Excel

Detailed analysis of the market and its participants during 4Q16 and the 2016 calendar year follows.
Requires Optical Hardware subscription.

3Q16 Optical Hardware Results

Cignal AI has released its comprehensive 3rd quarter 2016 (3Q16) optical equipment market share analysis, which provides a summary of revenue results for the quarter.

Summary

The global spending on optical network equipment increased dramatically in 3Q16, with all global regions showing increased spending year over year (vs 3Q15).

In North America, Ciena, Nokia, ADVA and Coriant all recorded positive year over year (YoY) results with Cloud and Colo customers driving large revenue gains. Overall, the NA region grew more modestly YoY than some of the other regions. Cable MSO’s spending declined, and large gains from the above vendors offset revenue declines at both Fujitsu and Infinera.
Huawei was the driver of YoY growth for EMEA yet again, as the company’s strong performance continued to mask declines in revenue for other equipment vendors in the region. Excluding Huawei, there was a sharp decline in spending, and Infinera was the only other vendor with substantial YoY gains.
Chinese optical equipment spending continued to surge, 20+% YoY, as coherent 100G deployment marched forward. Chinese equipment companies anticipate further growth through 2017, with an acceleration in metro WDM deployment next year.
Outside of the secular boom benefiting Chinese suppliers, Ciena and Nokia performed well YoY and ADVA preserved large gains it made in 2Q16. A common denominator of growth was exposure to the Cloud and Colo sector.
Japanese equipment suppliers enjoyed a second quarter of YoY revenue increases as 100G deployment is ramping up in the region. At the same time, a market share shift from NEC to Fujitsu appears to be taking place.

Subscribers to the Optical Hardware report can download an excel file with actual results through 3Q16. 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 November 28th.

Excel

Detailed analysis of the 3Q16 market and its participants follows.
Requires Optical Hardware subscription.

Investor Call – China 2017, CFP2-ACO, Coherent DSPs

Andrew Schmitt gave an update on the optical equipment and component market during an investor call hosted by Troy Jensen of Piper Jaffray on Tuesday, October 4. Sixty-eight investors participated. An extended Q&A session followed Andrew’s presentation, and topics of interest included:

China 100G port volume trends for 2H16 and 2017
Huawei’s upcoming 100G technology decisions and supplier purchasing shifts
CFP2-ACO shipments and the component & equipment supply chain for this product
Coherent DSP R&D developments and supplier updates
Updates on direct-detect 100G and PAM-4 development
Observations on Infinera, Ciena, Acacia, Inphi, and Clariphy and discussion of potential M&A activity

Following is a summary of the key takeaways, as well as a full transcript of the discussion. Cignal AI clients can also listen to an audio replay.
Continue Reading

1H16 Optical Hardware Applications

Our 1H16 edition of the Optical Hardware Applications report has been published.

The Excel file contains:

Datacenter Interconnect Hardware market share and forecasts
Advanced Switching Hardware market share and forecasts
100G+ Coherent port shipments and market share
100G+ Metro and edge port shipments and forecast
100G+ Port shipments and forecast by speed & technology

Subscribers can download the full excel file, registered users can view updated report information. Analysis is under way – we wanted to share market data with you as it became available.

Report Details Excel

2Q16 Optical Hardware Results

Cignal AI has released full optical equipment market share analysis from 2nd quarter 2016 (2Q16). This report summarizes optical equipment revenue results for the quarter.

Subscribers to the Optical Hardware report can download an excel file with actual results through 2Q16. This Excel file contains only historical data and is an interim release. An excel file with updated forecasts and additional analysis will be available August 29th.

Excel

Summary

Global spending on optical network equipment grew 15% from the previous quarter. However, this growth was largely driven by Huawei’s strong results in China and its export markets. Without Huawei’s results, the market was essentially flat YoY.

In North America, Ciena, Coriant, and Fujitsu recorded a weaker quarter than the previous as the robust spending from Cloud and Colo operators and from Cable MSO’s was not enough to offset declines in spending by the tier-1 operators such as AT&T and Verizon.
Huawei carried EMEA to year over year (YoY) growth; however, it masked a steep decline in revenue for other equipment vendors in the region.
In China, optical equipment spending was up dramatically–25% YoY– as the widespread deployment of coherent 100G continued to unfurl.
Second to Huawei, ADVA posted the strongest quarterly results with a large increase in coherent 100G shipments to North American Cloud and Colo customers. Also, Nokia secured a major win with China Mobile.

Detailed analysis of the market and it’s participants for 2Q16 follows.
Requires Optical Hardware subscription.

Acacia 2Q16 Preview

Acacia is scheduled to report earnings on August 11th, and this will be the company’s first quarterly report since completing its recent IPO. In April 2016, Cignal AI examined Acacia’s business and S-1 filing in detail and provided our analysis on the company (see Acacia Communications – IPO Analysis).

ADVA’s recent quarterly results hint at what to expect from Acacia’s 2Q16 results announcement. In the following, we provide relevant excerpts on Acacia from our just-posted ADVA 2Q16 notes so that we may share this Active Insight with our wider client and end-user audience, who may not necessarily be subscribers to our Optical Hardware reporting.

Some followers of the market are anticipating flat revenue results from Acacia in Q2. Based on our analysis, we think this expectation is too conservative.
Requires Optical Active Insight subscription.

ADVA 2Q16

ADVA released excellent quarterly results on Thursday, July 21th and its optical business is hitting on all cylinders right now. The company expects to sustain its current revenue surge through the coming quarter as it continues to ship an impressive amount of 100G ports.

ADVA’s results illustrate the pivotal impact that Cloud and Colo customers exercise over quarter to quarter revenue. These customers don’t follow the more steady and predictable buying patterns of traditional incumbent wholesale carriers.

Furthermore, ADVA’s robust results are an exceptional leading indicator for Acacia, which will report shortly on August 11th.

Cignal AI analyzes ADVA’s Cloudconnect, the ripple effect on Acacia, Inphi ColorZ, and offers our commentary on ADVA’s British Telecom business.
Requires Optical Hardware subscription.

2H15 Optical Hardware Applications

Our initial set of optical equipment results and forecasts for Datacenter Interconnect, Advanced Optical Switching, as well as detailed 100G+ Coherent and non-coherent port shipments have been published in Excel format.

Report information, tracked vendors, and details on categories have also been updated. Subscribers can download the full excel file, registered users can view updated report information.

Report Details Excel

1Q16 Optical Hardware Results

Full results and updated forecasts for 1Q 2016 have been published in Excel format. Subscribers can download the full excel file here.

Report Details Excel

Investor Call – China, CFP2-ACO, ROADMs & More

Andrew Schmitt created some excitement when he spoke about optical component and equipment market trends on a Piper Jaffray investor call on April 22. 83 investor clients were on the line, and some insightful questions were posed to Andrew as he gave his observations on a wide range of topics. The following is a full transcript of that discussion.
Continue Reading

Metro DCI – What’s Next

Andrew presented “Metro DCI – What’s Next?” at the annual OSA Executive Forum before OFC 2016. His slides focused on the evolution of metro DCI and highlighted the opportunity for metro-access 100G, including coherent and non-coherent approaches.

Co-panelists included Arista and Microsoft. Microsoft used this opportunity to announce it’s intention to deploy InPhi’s ColorZ PAM-4 metro-access 100G technology.
Requires Optical Active Insight subscription.

Optical Whitebox – OFC 2016

Component and equipment vendors outlined the investments they are making in anticipation of some service providers adopting open line systems or fully dis-aggregated optical systems. This is a contentious technology trend in the industry; one which ignites opinions and whose conclusion is far from clear.

After silicon photonics, this was the area of the most interesting activity during OFC 2016. It is a complex trend requires equipment & component vendors to pivot both their hardware architectures and business models to address new potential opportunities. And it is far from clear whether this market will extend beyond the webco.

We review vendor activity and our observations of this market.
Requires Optical Active Insight subscription.

Acacia Communications – IPO Analysis

The optical networking world finally gets a close up view of Acacia’s performance as the company is filing for an IPO. The most recent S-1/A filing by Acacia includes 2015 financial details, which we review through the lenses of Cignal AI’s customer and market knowledge in order to create a fine-grained view of the company’s performance and qualitative outlook. This analysis includes a detailed projection of customer composition for 90%+ of revenue, market share within entire 100G market, and estimates of ASPs beyond what is included in public documents.
Requires Optical Active Insight subscription.