Cloud Spending on Optical Hardware – 1Q18 Update

In October 2017,  Cignal AI analyzed the occurrence of a slowdown in spending by cloud & colo operators and quantified the magnitude of its impact (see Analysis: 1H17 Cloud and Colo Spending Slowdown).

The report conclusions contradicted the common but inaccurate perception that spending by cloud operators such as Amazon, Google, and Microsoft on optical transport equipment was growing at a rapid rate.

This report has been enhanced with new analysis and updated vendor shipment data from 3Q17, 4Q17, and 1Q18 from equipment and component vendors.

This update includes:

  • A summary of cloud & colo spending definitions
  • Fresh analysis of changes in quarterly spending trends by cloud & colo operators through 1Q18
  • Recent shifts in market share among optical equipment vendors to this customer market
  • Quantitative analysis of underlying causes of flat spending, including continued price compression through 2018 and displacement by IPoDWDM via Inphi, Acacia, and Oclaro components.

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OFC 2018 – Operator Perspectives

Each year at OFC, we have the valuable opportunity to hear from the network operators themselves to better understand their vision for the future network. This year, there were some excellent presentations and discussions involving operators from several network verticals – Incumbents, Cable MSOs, and of course the ever-expanding cloud and colocation operators.
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Investor Call – Piper Jaffray Optical Event

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Andrew Schmitt was the featured speaker on an investor call hosted by Troy Jensen of Piper Jaffray on February 21st. Forty-four participants listened in and posed their questions as Andrew gave his perspective on the latest events in the optical component and equipment market.

Topics during the call included:

  • Anticipated impact of China’s MIIT plan on existing component suppliers
  • The divergence in Chinese equipment revenue and supply chain
  • The market outlook for ROADMs in 2018
  • The 400G+ Coherent DSP and component outlook
  • The evolution of the CFP2-ACO and DCO market
  • Analysis of equipment companies outsourcing DSPs
  • Update on Inphi’s ColorZ, modulator driver, and PAM-4 business
  • Infinera’s market opportunity with the CX2 and ICE4 based products
  • North American CapEx in 2018 and optical equipment forecast
  • Ciena’s 400G market monopoly in 2018

Active Insight clients can access a summary of the key takeaways, a written transcript, an audio replay, and participate in Q&A.

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Analysis: 1H17 Cloud and Colo Spending Slowdown

Compact Modular Hardware Introduction Timeline

Cignal AI’s recent Optical Customer Markets Report discovered an unexpected weakness in 2017 optical transport equipment spending from cloud & colo operators (see Cignal AI Reports Unexpected Drop in Cloud and Colo Spending). This surprising trend was then further supported by public comments later made by Juniper and Applied Optoelectronics, prompting us to examine the situation in greater detail.

This detailed brief includes:

  • Cloud & colo spending as defined by Cignal AI
  • Analysis of quarterly spending trends by cloud & colo operators
  • Recent shifts in market share among equipment vendors to this market
  • Quantitative analysis of underlying causes of this slowing, including price compression and displacement by IPoDWDM via Inphi, Acacia, and Oclaro components

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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

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Investor Call – OFC 2017 Takeaways

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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.

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

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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.
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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.
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