The 40G market embarks upon a 'golden age'

This article originally appeared on fibresystems.org.

The market for 40 Gbit/s optical transport equipment is growing strongly and looks set to enjoy a five-year period of deployment opportunity before the 100 Gbit/s market gets into full swing, according to industry analysts.

The latest figures from research firm Dell’Oro indicate that worldwide revenues for 40 Gbit/s equipment are expected grow at a combined annual growth rate of 35%, reaching a market size of $1.2 billion by 2013.

“While the overall worldwide optical market declined 20% sequentially and 11% year-over-year mainly due to the effects of the global economy, the 40G market has shown continued growth and strength with a 1Q09 increase of 8% sequentially and 400% year-over-year,” said Jimmy Yu, optical market analyst, Dell’Oro.

And about time too. Early 40 Gbit/s implementations first appeared in 1999, some 10 years ago, and the technology has been through four product generations. In contrast, 100 Gbit/s technology is enjoying significant operator and vendor interest even though it is still in its first generation.

Almost every major equipment vendor has carried out a 100 Gbit/s field trial in the last year or so. And US carrier AT&T has stressed the need for higher capacity links on its network, stating that “every 10 Gbit/s lambda deployed today will become a 100 Gbit/s lambda by 2012″.

Naturally, this kind of optimism provokes questions about whether carriers might skip 40 Gbit/s and move straight to 100 Gbit/s. However, the analysts contacted by fibresystems.org think that isn’t likely to happen.

“First deployments [of 100G] will definitely be in 2012, as some equipment will be available by end of this year, and some carriers will deploy it just to be ‘first’,” said Eve Griliches, program director for IDC’s telecoms research. “But my guess is that real volume deployment will be in a third generation development of 100G, which will not be in 2012, but a year or two after that.”

David Dunphy, principle analyst with Telecoms Strategy Partners, believes the window of opportunity for 40 Gbit/s technology could last even longer. “40G has a strong life left, and will continue to grow and enjoy good opportunities for the next five to six years,” he contends.

“The challenges in successfully commercializing 100G as well as overcoming the technical challenges are greatly underestimated,” he added. “Commercially, we think it could take at least another three years after 2011 for 100G to fully ‘prove in’ from the business case perspective.”

Griliches believes the fact that the majority of vendors are coordinating their efforts around a single modulation format will help speed 100 Gbit/s to market. “What 100G has going for it is the ability to leverage all the technological development that has gone into 40G to date, which leave less of a new burden on that technology,” she said.

But she agrees that the industry is still very much in the early stages of understanding 100G technology, and whether it will meet the distance requirements set for 10G and 40G — the implication being that ongoing R&D might turn up a better solution than the one currently being commercialized.

“If new modulation formats come to market that make 100G even more compelling, that will push the roadmap out again, leaving the window for 40G open even longer,” she said.

Reproduced with permission. © Institute of Physics and IOP Publishing Ltd.