The Transition to 40 Gbps: A Market Opportunity Study

SUMMARY

Upgrades of public networks to 40 Gbps are accelerating and an increasing number of equipment and component firms are announcing 40 Gbps products and receiving additional funding.

However, the transition to 40 Gbps will be different to previous SONET/SDH upgrades in a number of important ways. Going forward the new 40 Gbps products will have to support primarily IP and increasingly video; a very different traffic content than previous TDM products were designed to carry. In addition, 40 Gbps offerings will have to provide compelling advantages over Ethernet alternatives, since Ethernet now competes with SONET/SDH everywhere, except in the long haul. Also, with 40 Gbps the highest point defined in the SONET/SDH hierarchy, 40 Gbps firms will have to take into consideration that their products will increasingly operate in a DWDM/OTN environment.

All of these changes present opportunities for firms to distinguish themselves in the components and modules marketplace in a way that is no longer possible in the increasingly commoditized 10 Gbps space. But in order to take advantage of these opportunities, component and module manufacturers are going to have to find creative ways to deal with problems such as dispersion, sophisticated modulation schemes and cost effective MSAs. All of these are issues that were raised at the 10 Gbps level, but will become much more critical at 10 Gbps. One especially challenging issue for the growth of the 40 Gbps market is that at this data rate, it no longer operates at the same speed as Ethernet and so cannot directly take advantage of the low-cost Ethernet optics.

This new report from CIR analyzes and quantifies the emerging opportunities for 40 Gbps networking components and modules. In addition, this report includes an in-depth discussion of the strategies being adopted by leading component and module manufacturers to take advantage of 40 Gbps market opportunities, along with a five-year forecast of all the major component and module products in the 40 Gbps space.

TABLE OF CONTENTS

Executive Summary

• E.1 Introduction
• E.2 Summary of Major Opportunities for Components Manufacturers
  • E.2.1 Cost Reduction
  • E.2.2 Development of Short-Reach Interfaces
  • E.2.3 Advanced Modulation Schemes
  • E.2.4 Dispersion Compensation
• E.3 Summary of major opportunities for module manufacturers
• E.4 Summary of Firms to Watch in the 40-Gbps Space
• E.5 Summary of Five-Year Forecasts for 40-Gbps Components and Modules Markets

Chapter One: Introduction

• 1.1 Background to this Report
• 1.1.1 The State of 40-Gbps Networking in 2007
• 1.2 Objectives of this Report
• 1.3 Scope of this Report
• 1.4 Methodology and Information Sources for Report
• 1.5 Plan of this Report

Chapter Two: Technology Trends and New Products

• 2.1 Introduction
• 2.2 Evolution of 40-Gbps Lasers and Transponders
  • 2.2.1 Existing 40G Transponder Technology
  • 2.2.2 Form Factor Developments
• 2.3 Evolution of 40-Gbps Detectors
• 2.4 Modulation Schemes and Modulator Trends at 40 Gbps
  • 2.4.1 Modulator Technologies
  • 2.4.2 Intensity-based Modulation
  • 2.4.3 Advanced-based Modulation
• 2.5 Amplifier Requirements for 40-Gbps Networks: Potential for New Products
• 2.6 Dispersion Compensation for 40-Gbps Networks: Optical and Electronic
  • 2.6.1 Chromatic Distortion
  • 2.6.2 Polarization Mode Dispersion
• 2.7 40-Gbps Electronics
• 2.9 Emerging MSAs for 40-Gbps Modules

Chapter Three: Analysis of the 40-Gbps Networking and Equipment Market

• 3.1 How and Why the Networking and Telecom Industries are Using 40 Gbps
• 3.2 Short-haul Markets: 40 Gbps in the POP and Internet Exchange
• 3.3 Long-haul Markets: 40 Gbps In Metro Core and Long-Haul Networks
  • 3.3.1 40-Gbps Line-Side Interfaces
  • 3.3.2 Distances and Long-Haul Performance
• 3.4 40-Gbps SONET/SDH in the Future OTN
  • 3.4.1 The OTN
  • 3.4.2 Next-Generation SONET/SDH
• 3.5 Will the SONET/SDH Hierarchy Scale Beyond 40 Gbps?
  • 3.5.1 ITU and the Future of SONET/SDH
• 3.6 Equipment Vendors Adopting 40-Gbps Technology
• 3.7 Implications for Components and Module Manufacturers

Chapter Four: Profiles of Leading Module and Components Firms Active in the 40-Gbps Market

• 4.1 Introduction
• 4.2 Apogee Photonics
• 4.3 Avanex
• 4.4 Bookham
• 4.5 CIP
• 4.6 CoreOptics
• 4.7 CyOptics
• 4.8 Finisar
• 4.9 Hitachi Cable
• 4.10 Inphi
• 4.11 JDS Uniphase
• 4.12 Kailight Photonics
• 4.13 Luxtera
• 4.14 Opnext
• 4.15 Picometrix
• 4.16 TeraXion
• 4.17 u2t Photonics
• 4.18 Other 40G Component Players

Chapter Five: Market Forecasts

• 5.1 Forecasting Methodology
• 5.2 Market Forecasts
  • 5.2.1 Evolution of the VSR Market: 2006-2012
  • 5.2.2 Evolution of the Longer-Reach 40-Gbps Market: 2006-2013
  • 5.2.3 Five-Year Forecasts of 40 Gbps Transponder Markets
  • 5.2.4 Five-Year Forecast of 40-Gbps Transponders and Modules by Equipment Manufacturers

Acronyms and Abbreviations Used in this Report

About the Authors

List of Exhibits

• Exhibit E-1: 40 Gbps Components and Modules Suppliers
• Exhibit E-2: 40-Gbps Component and Module Purchases by Equipment Manufacturers($ Millions)
• Exhibit 2-1: Key Laser Characteristics at 40 Gbps
• Exhibit 2-2: Commercially Available 300-Pin LFF Transponder Performance Characteristics
• Exhibit 2-3: The Extended XFP's Key Metrics
• Exhibit 2-4: Key Receiver Parameters at 10 and 40 Gbps
• Exhibit 2-5: Modulator Technologies
• Exhibit 2-6: Comparison of Modulator Types
• Exhibit 2-7: Duo-Binary, DSPK And DQPSK Modulation Format Characteristics
• Exhibit 2-8: Merits of the Different Chromatic Dispersion Compensation Techniques, and the Players
• Exhibit 2-9: PMD With Data Rate And Distance
• Exhibit 2-10: 40-Gbps SERDES Products
• Exhibit 3-1: The Applications and Ranges Of 40 Gbps
• Exhibit 3-2: Modulation Schemes Currently Being Adopted By Vendors
• Exhibit 3-3: Vendors Adopting 40-Gbps Technology
• Exhibit 4-1: Strategic Focus of the 40G Component and Module Players
• Exhibit 4-2: Strengths and Weaknesses Analysis of Leading 40G Players and Likely Market Entrants
• Exhibit 4-3: Other Components and Modules Firms Active in the 40 Gbps Space
• Exhibit 5-1: Evolution of 40-Gbps VSR Market
• Exhibit 5-2: Evolution of 40 Gbps LR Market
• Exhibit 5-3: Worldwide 40-Gbps Market by Reach (000s)
• Exhibit 5-4: Worldwide 40-Gbps Transponder Market
• Exhibit 5-5: 40-Gbps Transponder Shipments by MSA (000s)
• Exhibit 5-6: Worldwide Purchases of 40 Gbps