10G optical players hold the door as copper storms the data centre

By Brad Smith, Sr. Vice President and Lead Analyst, LightCounting, LLC.

Optical transceiver suppliers face a unique market opportunity in datacenters, if they can remove past stigmas from the optics.

As the datacenters emerge from the economic crisis and "go shopping" there's a real opportunity for optical transceiver suppliers to capture a significant share of the 10 Gbps port market. However, the vendors need to market their story stronger to remove past optical stigmas. The time is now before 10GBase-T becomes established.

The February IEEE Ethernet Alliance and Ethernet Summit conferences held in the Silicon Valley clearly showed that optical products, companies and marketing messages are simply not present, but a handful of 10GBase-T start-ups, with $600M in VC funding have a disproportionate level of awareness. Optical product benefits awareness with the datacenter crowd is very low and optical interfaces are perceived as expensive, power hungry and high-maintenance.

Sales of all Ethernet Interconnects reached over 600 million units in 2009 according to the IEEE Ethernet Alliance. The often repeated common perception is that 10Gbps Ethernet and Fibre Channel-over-Ethernet is already established and using 10GBase-T RJ-45 copper interconnect, while the optical interfaces is not a play. In fact, many servers and switches do not support 10GBase-T and offer SFP+ sockets that supports both optical and Twin-Ax copper. Estimates from various sources state 10GBase-T shipments were ~150,000 units for 2009. According to LightCounting data, optical 10GbE shipments (<100 meters) are over 900,000 units and over six times larger in 2009.

The sequential jump in copper from 10M, 100M, 1Gbps, will not be the same going to 10Gbps and the linear thinking that 10GBase-T will automatically claim the "600M ports" any time soon, if at all - is not likely. The technology is much harder to build with chips rivaling microprocessors in size, power and cost not to mention requiring new Cat-6a cable to be pulled (so why not pull fiber?). RJ-45 copper and optical costs and power factors have flipped at 10 Gbps, but the market awareness is missing, while RJ-45 copper interconnect remain mentality pervasive in many datacenters. The SFP+ is the new kid on the block and also a competitor to optical for <7 meters - but at least it is an optical compatible socket.

As usual, the conferences had many presenters on rapidly growing demand for bandwidth. Spokespeople from the NYSE and FaceBook stated that they would skip 10G and go straight to 100G if it was available, small-sized and cost effective today. Although, it would be a shame for the optical community to get distracted by future promises of 100 Gbps technology and skip a real opportunity for 10 Gbps products today.

"It's during transition that the opportunities are the biggest. Optical vendors looking to exploit the 10Gbps transition datacenter opportunity need to promptly and clearly get the optical product benefits story to the marketplace."

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