Demand for 100G+ coherent WDM shifting away from China: Cignal AI

Cignal AI states in its most recent "Optical Applications Report" that the demand center for coherent transmission at 100 Gbps and above will move westward this year. Growing demand for coherent transmission in Western markets, led by deployments of compact data center interconnect (DCI) platforms, will offset declines in China, the market research firm predicts.

"After doubling in 2016, demand for 100G+ coherent WDM in China will slow this year. But our forecasts show that Western markets will offset this decline as cloud/colo providers, cable MSOs, and traditional incumbents expand use of DCI products in their networks," explained Andrew Schmitt, lead analyst for Cignal AI. "These companies want to deploy the most cost-effective technology, which is why we expect that more than half of all metro bandwidth deployed around the world in 2017 will be in the 200G format."

Schmitt expects dramatic growth in 200G and 400G deployments this year. CFP2-ACO optical transceivers will lead the way for 100G and 200G applications in the West, according to the report. Meanwhile, in China, Cignal AI expects growth in coherent demand to drop considerably as the market moves to DCO modules and shifts focus to metro requirements. Last year 100G coherent demand in China doubled, to account for 55% of the global 100G coherent market.

In the DCI space, Cignal AI expects demand for compact DCI platforms to grow at a 65% annual clip through 2021. Cloud and colocation providers currently make up the vast majority of the market for such platforms. While Infinera used its first-to-market status to win the greatest portion of last year's demand, Cignal AI doesn't see the cloud and colo providers as particularly brand loyal. Therefore, Ciena, Cisco, and Fujitsu – all of whom have competing platforms in production – are in position to gain market share. Increasing interest in compact DCI platforms among cable, wholesale, and incumbent telco operators also should provide additional sales opportunities.

The "Optical Applications Report" also covers the advanced switching space. Cignal AI sees the space as a $2 billion global market that is set to growth at 20% annually over the next five years. Incumbent providers such as Verizon, China Mobile, and Telefonica represent the primary market for such platforms, as they are converging their transport networks with new systems that integrate wavelength, Optical Transport Network (OTN), and Ethernet switching into a single chassis, according to the market research firm.

The Cignal AI "Optical Applications Report" offers revenue-based market share and forecasts for DCI and advanced optical switching applications. It also includes detailed port-based vendor market share and forecasts for 100G shipments for edge, metro, and long-haul applications. Report deliverables include an Excel file with the complete data set, PowerPoint summary, and Optical Equipment Active Insight.

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