Optical Networking Featured Article

Data Center Optical Market Literally and Figuratively Speeding Up

May 14, 2015

There have been a slew of names to describe the era we are in including “Age of Applications” and “Age of IoT,” and a lot more. However, there is one constant that applies to all of them and that is the insatiable appetite to go faster.  The “need for speed” is critical to every aspect impacting the future performance and even trustworthiness of “E”verything. 

This is particularly true when it comes to our increasingly data center-centric world.  Whether inside the data center itself or connecting to the world, connectivity needs to go faster and have more bandwidth in anticipation of not just more video, but the sending of things like holograms and 3D printing renderings.  And, to address this need for speed fiber optics, again inside and outside the data center is the media of choice for a host of obvious reasons regarding speeds and capacity.

Given these realities, it is not surprising that technology market research firm IHS Infonetics is out with a report, biannual 10G/40G/100G Data Center Optics Market Size and Forecast: 2015, that found revenue from 10-, 40- and 100-Gigabit optical transceivers sold into the enterprise and data center markets grew 21 percent in 2014 to $1.4 billion. It is also not surprising that the bulk of the growth is attributable to 40G QSFP (quad small form factor pluggable) spending currently. However, more capacity is on the way.

“40G transceivers are ramping up hard as data centers deploy 40GbE, particularly as a high-density 10G interface via breakout cables. 40G QSFP demand growth over single-mode fiber is primarily a result of large shipments to internet content providers Microsoft and Google,” said Andrew Schmitt, research director for carrier transport networking at IHS Infonetics.

“The market for 100G data center optics is accelerating, but it has yet to be turbocharged by widespread data center deployment in the way 40G QSFP optics have. This will change dramatically in 2016 as cheap 100G silicon reaches production and QSFP28 shipments surge as a result,” Schmitt said. “Next year is going to be huge for 100GbE.”

Corroboration of the prediction that 100Gbe is going to have a big year in 2016 is readily apparent from product announcements and activities in various industry forums surrounding the move to 100G, and the glide path to get there without a major fork lift. In addition, as the graphic from the report shows, the urgency of data centers to get a speed and capacity boost translates into 100G emerging as the dominant optical transceiver solution. 

As IHS Infonetics points out, the biannual 10G/40G/100G data center optics report has a significant amount of granularity. It analyzes the optical transceiver market by module speed (10G, 40G, 100G), reach, wavelength and form factor.  They note that the unit volume forecasts are based on IHS Infonetics’ 1G/10G/40G/100G Networking Ports forecast, which aggregates trends from a wide range of enterprise, datacenter, optical transport, and carrier routing and switching equipment.

A few of the highlights cited by IHS Infonetics are food for thought. They include:  

  • Data center transceivers account for 65 percent of the overall (telecom and datacom) 10G/40G/100G optical transceiver market
  • Total 40G transceiver revenue grew 81 percent in the second half of 2014 (2H14) over the same period a year ago (2H13)
  • 10G shipments in the data center continue to grow at healthy rates, but are being impacted by growth of 40G interfaces used as high-density 10G interfaces
  • Meanwhile, worldwide revenue for client 10G modules was flat on a year-over year basis in 2014
  • IHS Infonetics expects the datacom optical transceiver market to grow to over $2.1 billion by 2019

Possibly the most interesting finding in the report is the speed at which the market ramps.  After all, 2019 is not that far into the future, and we are looking at many orders of magnitude increases here.  While an unusually steep ramp for infrastructure technology adoption, the projection tracks the speed at which data is becoming very big and hence the need to accelerate the ability, and price performance, of how it is produced, stored, accessed, transmitted and analyzed. The demand is very real, and optics is at the core and edge of how it will be accommodated. 

Edited by Dominick Sorrentino

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