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

OFC 2017 – Compact DCI Equipment

In our final OFC 2017 report we discuss new product announcements on purpose-built datacenter hardware and components, and share our thoughts on market developments.

  • Evolution of the compact DCI market, including recently published 4Q16 market share and adoption by new customers
  • New products and solutions, investigating announcements by Nokia, Fujitsu, and Juniper
  • Direct detect – one year later, the appearance of Ranovus, and network operator of the technology’s long term prospects

Requires Optical Active Insight subscription.

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. Some member of the Cult of Open overloon 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 disaggregation 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.

Infinera Introduces Instant Network and Leads the Way to Cognitive Networking

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.

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.

Lightreading: Infinera, Nokia Chase ‘Anyhaul’ Dollars

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.”

Ciena Wavelogic Ai and 400G Roadmap

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.

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.
Requires Optical Active Insight subscription.

Infinera Introduces Cloud Xpress 2; Extends Leadership in Data Center Interconnect

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.”

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.

Ciena 2Q16

Cignal’s Active Insight promises real-time information, and with that in mind, we are providing an update on Ciena. Ciena reported results for its April-2016 quarter on June 2nd. Corporate results were decent from an overall revenue perspective, but performance in the optical equipment area was slightly disappointing. Some interesting things from Ciena are reaching market, such as lower cost 200G and Waveserver, but these innovations have not yet positively impacted the company’s optical revenue.
Requires Optical Hardware subscription.

Infinera 2Q16

Infinera held it’s Q2 Earnings Call on Wednesday, July 27th, and it was surprising to say the least. The company conveyed expectations for an exceptional slowdown in demand for Q3. Cignal AI has analyzed Infinera’s 2Q16 results and we present both company comments and our own opinions on what caused this major shift in expected demand and the forces behind it.
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