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What to expect in 2016? Funsso news

Time:2016-09-21 Click:620

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

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