LightTrends

 

What to expect in 2016?

 

 

LightCounting publishes an analysis of 2015 events and projections for 2016 in its January research note.

 

 

2015 was another good year for suppliers of 100G DWDM optics and transponders. Despite a slow start, the second half of the year was strong. We estimate that the total number of 100G DWDM ports shipped in 2015 will be close to 150,000 - just above our forecast published in August 2015, shown in Figure 1.

Expectations for 2016 range from a moderate growth of 30% to a more radical 50-60% increase, indicated by the dashed lines in Figure 1. The moderate scenario is consistent with our long-term forecast model based on a gradually declining growth rate of Internet traffic. The more aggressive one has been suggested by at least a couple of suppliers looking at the market on a near-term “tactical” range.

Figure 1: Shipments of DWDM Ports

Source: LightCounting Market Research

Reports by Finisar and Lumentum of sharply higher sales of WSS modules in the second half of 2015, including new flex-grid products are another data point suggesting high growth in the 100G DWDM market in 2016. The WSS market had a very strong 2010, and this was followed by sharply higher shipments of 40G and 100G DWDM optics in 2011-2014. Another such pick-up in WSS sales may be a leading indicator of the next network upgrade cycle. Sales of flex-grid WSS suggest that first deployments of CDC-ROADMs and super-channel DWDM systems have begun.

A more optimistic strategic analysis of network traffic growth is presented in a recently published book titled “The Future X Network. A Bell Labs Perspective”. It argues that another phase of Internet usage is upon us, driven by the digitization of everything, automating businesses and human behavior to an extent never before possible, which is often referred to as the Internet of Things (IoT). The book offers a comprehensive analysis of potential changes in network architecture crucial for the implementation of IoT.

There is a lot of skepticism about the impact of IoT on network traffic. Some of this is justified, because most of the “things” will not have much to say, not to mention they will not be watching videos. The Bell Labs Perspective does offer a compelling argument in support of the future global-local cloud network, where significant compute and storage resource will be distributed to the edge of the network. This would effectively transform a central office into a data center creating an edge cloud, supporting local IoT applications. Interconnecting the edge cloud data centers with 100G DWDM would certainly please suppliers of high end optics.

Can we see more signs of this transition in 2016? Changing human behavior takes time. However, service providers are starting to earn revenue from emerging IoT applications. A fear of losing out on these opportunities to Web2.0 companies may also contribute to their investment decisions in 2016.

Full version of the research note is available to clients this afternoon at: www.LightCounting.com/login.cfm

Recently published reports:

  1. High-speed Datacenter Interconnects, June 2015
  2. Next-Generation FTTX Optics, July 2015
  3. Optical Communications Market Forecast, August 2015
  4. Quarterly Market Update Report, September 2015
  5. Mobile Fronthaul Optics Report & Forecast, November 2015
  6. Quarterly Market Update Report, December 2015
  7. Active Optical Cables and Embedded Optical Modulest, December 2015

Coming soon:

  1. Market Opportunity for Optical Integration Technologies, including Silicon Photonics January 2016




ABOUT LIGHTCOUNTING MARKET RESEARCH
LightCounting is a leading optical communications market research company, offering semiannual market updates, forecasts, and state-of-the-industry reports based on its analysis of primary research with dozens of leading module, component, and system vendors as well as service providers and other users. LightCounting is the optical communications market’s first choice source for the accurate, detailed, and relevant information necessary for doing business in today’s highly competitive environment. For more information, visit: www.LightCounting.com or follow us on Twitter at @LightCounting.