Optical Components Market: Market Share ECOC 2016 Components Market: Market Share ECOC 2016 Kevin R. Lefebvre, Ph.D. Principal Analyst Ovum [email protected]

Optical Components Market:

Market Share ECOC 2016Kevin R. Lefebvre, Ph.D.

Principal Analyst

Ovum

[email protected]

• State of Nation

• Optical Component 2Q16

• Optical Components Forecast

• Data Centers

Ovum | TMT intelligence | informa3 Copyright © Informa PLC ECOC 2016

Guess What????

Expansion in Data Centers

Expansion in Long Haul, Metro and

Access


Data Center Expansion

Microsoft: SDN for Cloud 2015http://conferences.sigcomm.org/sigcomm/2015/pdf/papers/keynote.pdf

Building blocks used in Google’s Jupiter topology.

Facebook’s topology.


Over 650 million Internet users

China's three largest data center operators in the country

China Telecom, China Mobile and China Unicom

Operate over 500 facilities.

China Unicom, the country's second largesttelecom carrier

Expanding their Internet data centers to host 4 million units of computer servers

Currently has six national-level Internet data centers and a dozen smaller data centers, which now are hosting roughly 1 million servers

China Data Centers

Sampling of China Telecom Data Centers

Only fiber from their own network goes into their data centers


Baidu, Alibaba and Tencent (BAT) have been taking up a lot of DC space over the last 5 years and will continue to expand

China content consumers

A large number of the China internet users are mobile user

Consume content, order services (taxis, train tickets, order food, etc.) through mobile apps and mobile payment

Use mobile chat app Wechat and social chat apps such as Wechat, MoMo,MeiTu

Mobile Videos content is very big in China with mobile gaming being second

Banking industry is not as large in China as elsewhere in the world.

China’s other Big 3

http://www.onlinestrat.fr/annuaire/corp/international/chine/index.php

China has seen double digit growth every year in DC expansion since 2008

Ovum | TMT intelligence | informa7 Copyright © Informa PLC

Optical Networks and Components: Current State


The OC market continued its upturn during the second quarter of 2016.

China builds in mobile, access and core networks continues

Webscale data center builds in North America, China and Europe

100G and 200G coherent transmission in telecom.

Optical networking and components forecast

Source: Ovum


Strength in the telecom segment is driven by demand for 100G coherent components and ROADMs.

The market is supported mostly by discrete components although there are some OC vendors shipping line-side transceivers.

As the market transitions to metro deployments, more pluggable transceiver will ship.

200G is also gaining rapid acceptance.

Telecom market

Source: Ovum


Datacom continues to accelerate and will continue as more data centers start to implement 100G.

Majority of the vendors expect the rollout of 100G to pick up in the second half of the year.

Expansion of vendor’s capacity will continue to keep up with the demand.

Datacom market

Source: Ovum


By region: APAC is leading the Pack


Optical Components as a whole

Source: Ovum

Ovum | TMT intelligence | informa13 Copyright © Informa PLC

Optical Network and Components:

Forecast for 40-200G


Total Optical Components Forecast 40-200G

Source: Ovum


Optical modules by segment

Source: Ovum

Data Center


Intra-DC transceivers (000’s)

Capex $billions

Servers: millions

WAN traffic: Pbps

Data center space:

Millions square feet

Data center market watch

Web-scale core data center builds continue and next-generation data center architectures begin to deploy

2012-2015 2016-2018

Server ports 10 Gbit/s 25 Gbit/s

Server footprint density 1x 6x-10x

Intra-data center switch fabric

40 Gbit/s 100 Gbit/s

WAN DCI traffic Multi-Wavelength

Multi-WDM system

Next-generation data centers


The intra–data center interconnect market

• Key buying segments are:

• The largest Internet content providers (ICPs)/OTTs with web-scale data centers

• CSPs, carrier-neutral providers, and others building or adding to their data center capacity at web scale

• The intra–data center interconnect market is a major opportunity for the component community The market is for both:

• Multimode fiber systems

• Singlemode fiber systems

Facebook’s Data Center


Both demand-side drivers (application growth) and supply-side enablers (DC construction)

Optical component growth

New fiber and technology opportunities

ICPs build new cost-optimized web-scale data centers

New data center builds are populated with the latest architecture and intra-DCI switching fabric

ICPs also continue to take co-location space in third-party data centers for edge DCs and international markets

The petabit metro network presents a huge intra-DC and inter-DC connectivity opportunity

Transceiver market driven by a number of factors

Web-scale data center builds continuing


Datacom expansion


100G WAN Ports


TAM for 40, 100 and 200G datacom and WAN-client transceivers


Current PSM4 and CWDM4New construction data

centers are leaning towards CWDM4

Existing data centers are using both PSM4 and CWDM4

TAM for datacom and client-side modules by distance

Source: Ovum

100G


TAM for datacom and WAN-client modules by form factor

Source: Ovum

100G


Grabbing for the Margins: Porter’s 5 Forces

Internet Content ProvidersOptical Network Vendors

CarriersThe “Public”

A lot of component suppliers and more coming

Large raw material suppliers but optical component suppliers

have low volumes especially supporting

numerous technologies

Photonics IntegrationNew Materials:

e.g. Metamaterial


Technologies bring opportunities and challenges

Supporting various technologies

Increase in engineering, sales, product support and marketing

Reduces buying power of raw materials

Splintered product line

Solution

Finding a common platform to build upon the product

Photonics Integration


Competitors in Photonics Integrators: Field is crowded

Potential DC usersShipping and Developing


Metamaterials are artificially structured materials used to control and manipulate light.

Metallic or semiconductor structure where the optical properties depends on the properties of their constituent materials and from the geometrical arrangement of those materials

The elements of the structure are subwavelength and are designed to collectively interact with light

Allows for the design of smaller photonic devices since the wavelength of the electron is much smaller than the wavelength of light

Devices have been fabricated using standard CMOS processing.

Typical polarization beam splitters are on the order of 100 microns which is 50x times the size of the metamaterial device

Threat of substitute products: Metamaterials

“A scanning-electron micrograph of a polarization beamsplitter showing how light of both polarizations enters from the left waveguide and is separated into the two polarizations at the output waveguides on the right. TE: Transverse electric. TM: Transverse magnetic.”

http://spie.org/newsroom/6046-digital-metamaterials-shrink-integrated-photonic-devices


Duke

Purdue

MIT

Exeter

Univ. of Cambridge

Univ. of Southampton

Boston Univ.

Imperial College

Berkeley

UC San Diego

Denmark Technological Univ.

Sampling of University research


Advanced technology III-V, Silicon, Seeding III-V onto Si or Hybrid

Are companies not in the space behind?

Opportunities

Substantial growth in the Optical Components Market

Data Center Market

Challenges

Competition is strong

Current margins for component suppliers are thin

Technology challenges

Reaching the $1/Gbps is a stretch

Opportunities and Challenges

Margins for component suppliers


There are opportunities

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Source: Ovum

Cumulative historic 100G transceiver shipments vs. 100G requirements for one brand-new data center

100G transceivers for one fully populated DC (2016–17 vintage)

Cumulative 100G transceivers shipped todate

• New intra–data center interconnect market will create a huge 100G opportunity

• Components side, and test and measurement side

• Additional market upside is possible if more web-scale-like operators emerge

• The fine print: ICPs will be demanding on price and requirements

Thank you.Please feel free to email me at:

[email protected]

Documents

Optical Components Market: Market Share ECOC 2016 Components Market: Market Share ECOC 2016 Kevin R. Lefebvre, Ph.D. Principal Analyst Ovum [email protected]