Cignal AI has released its 1st quarter 2017 (1Q17) optical hardware market share analysis, which includes a summary of revenue results for the quarter.
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.
Infinera announced a major upgrade to its XTM chassis (Transmode acquisition) bringing 200G and 400G uplink capabilities to existing systems already deployed in the field.
Service providers are moving packet intelligence closer to the edge of the transport network to support high-capacity and low-latency applications like the Remote PHY requirements of Cable MSOs,” said Andrew Schmitt, Founder and Lead Analyst at Cignal AI. “The Infinera XTM II supports metro packet-optical applications with WDM uplink speeds up to 200G, while maintaining support for the installed base and the wider XTM Series.
Infinera announced its new CX2 is GA and deployed in cloud and colo networks, a crucial strategic follow up to its successful first-gen Cloud Xpress, which the competition has now caught up to.
Infinera raised the bar in the industry with the Cloud Xpress, beating its competition to the market with a platform purpose-built for DCI,” said Andrew Schmitt, Founder and Lead Analyst at Cignal AI. “The general availability of the Cloud Xpress 2 places Infinera in a leadership position to continue meeting the challenging technical, cost and high-volume requirements of cloud and content provider networks.
As part of our discussion on disaggregation vs integration, the NGON team asked Andrew Schmitt, founder at Cignal Al and Brad Booth, principal engineer at Microsoft, for their views on disaggregation, in order to give our community, further understanding and insights on the topic.
NGON team: Disaggregation vs integration?
Andrew Schmitt: Disaggregation. Equipment makers need to have the ability for customers to pick and choose vendor components and place them on their network if that’s the direction they want to take. This isn’t the right choice for most operators but it is something that vendors must support.
Some vendors like Ciena or Infinera can do this, but if you operate a network exclusively with their components better performance can be obtained.
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:
Infinera announced a major expansion of its Instant Bandwidth feature, making those features network wide and eventually paired with software-based network control.
“Capacity engineering is now a major challenge for network operators as demands for more agile connectivity increase,” said Andrew Schmitt, founder at Cignal AI. “Infinera’s Instant Network evolves its existing solutions to automate capacity engineering in a way that no other architecture can match by combining high-capacity integrated photonics and a unique software approach.”
The release was written up in LightReading with a quote:
Industry analyst Andrew Schmitt, founder at Cignal AI, agrees that Ciena’s pitch is focused on “seeking to extract maximum capacity from deployed assets that are bought and paid for.” And in terms of that bigger picture, Ciena’s Liquid Spectrum “also has a more overt way of expressing openness for controlling transponders/common equipment from multiple vendors, using Blue Planet. Infinera can do this with its software, but Blue Planet has a longer history of multi-vendor work,” notes Schmitt.
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.
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).
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.
Andrew Schmitt comments on Infinera’s announcement of an upgraded mobile anyhaul (front/backhaul) optical transport system.
Andrew Schmitt, industry analyst and founder of research firm Cignal AI, notes that “this is a very small market outside of China, but as Western operators look towards 5G upgrades and the increased density and bandwidth required, a new fronthaul/backhaul infrastructure is mandatory. This is a market that Transmode has been focused on for some time — well before it was acquired — and is a good example of the kinds of engineering skills that Infinera acquired outside of its traditional area of expertise.”
This past October, Ciena announced its new coherent DSP, dubbed Wavelogic Ai. Ciena used the announcement to convey its coherent 100G+ roadmap and support for 400G. Ciena also hinted at important changes to its 100G+ business model as Wavelogic Ai is introduced to customer networks. These changes also cascade into the 400G component supply chain.
Wavelogic Ai doubles down on Ciena’s strategy of vertical integration of the DSP and optics, and extends it further into the control plane. The company continues to eschew the use of outside suppliers like Acacia, NTT Electronics, or Clariphy. We believe Ciena’s vertical integration is the company’s strategy for successfully competing with commodity hardware and dis-aggregated networks. Requires Optical Active Insight subscription.
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.
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.
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
Infinera announced a follow on product to it’s groundbreaking Infinera Cloud Xpress, including the integration of it’s GEN4 PIC technology.
“Cloud and content providers are the first to deploy any new technology that helps them better address the rapid growth of their networks,” said Andrew Schmitt, Founder and Lead Analyst at Cignal AI. “Infinera was first to market with a purpose-built DCI platform that did exactly that, and it essentially owns the market for this type of equipment today. The design of Infinera’s new Cloud Xpress 2 raises the bar again with the density, capacity and operational simplicity that helps cloud and content providers meet the scaling challenge.”