The market for compact modular optical equipment is on track to top $1 billion in revenue this year, according to the latest Optical Applications Report from Cignal AI. the category includes equipment designed specifically for use in DCI, open & disaggregated hardware applications.
Cignal AI has raised its CY18 forecast for 200G and 400G coherent port shipments and cut its 100G coherent forecast.
“Operators are rapidly adopting second and third generation coherent technology as they seek to lower their cost per bit and achieve better performance. This has resulted in higher than expected demand for 200G and 400G speeds this year, at the expense of first-generation coherent,” said Andrew Schmitt, lead analyst for Cignal AI. “Compounding this trend is the growing adoption of 200G CFP2 DCO modules, which allows coherent technology to integrate with switches and routers more easily than earlier solutions.”
Some highlights from Cignal AI:
- Ciena and Huawei Top Compact Modular Market Growth – In this record quarter, Ciena and Huawei were the fastest-growing vendors in the compact modular segment. Ciena benefits from its third-generation coherent technology, while Huawei was lifted by greater adoption from Chinese cloud operators. New entrant Nokia also grew share in its second quarter of serving this market.
- Packet-OTN Market Grows with Incumbent Adoption – More incumbent network operators are using packet-OTN switching hardware to upgrade their transport networks. In North America, this segment grew 30 percent year-over-year as result of more deployments by Verizon and other large incumbents. Growth was also significant in EMEA and India, where Nokia has taken significant market share.
- Third Generation Coherent Gaining Momentum – Even though the overall market slowed in 2Q18 as a result of ZTE’s shutdown, other vendors experienced healthy sales growth. Third generation coherent solutions are picking up steam with Ciena’s 400G offering doing well. Acacia, Huawei, Nokia, and NTT Electronics based solutions will reach the market within the next two quarters to challenge Ciena’s lead.
