Dell’Oro: Optical Transport Equipment Market Stagnant in 1Q 2021; Jimmy Yu’s Take
The Optical Transport equipment market came in roughly flat with the year ago quarter in 1Q 2021, according to a new report by Dell’Oro group. The North American market was the main reason for this stagnant growth rate, offsetting all of the year-over-year growth in the other regions.
“Although the North American region was down this quarter compared to last year, it did improve from last quarter,” said Jimmy Yu, Vice President at Dell’Oro Group. “In fact, the growth quarter-over-quarter was really strong. It grew just a little over 15 percent, and we think this strength will carry forward through the remainder of the year,” added Yu.
Highlights from the 1Q 2021 Quarterly Report:
- The top manufacturers by revenue share were Huawei, Ciena, ZTE, and Nokia. Among the top four, Nokia gained the most revenue share over the year ago quarter.
- Three vendors (Ciena, Huawei, and Infinera) are actively shipping 800 Gbps-capable coherent line cards. However, due to the company’s early entry, Ciena holds the lion share of shipment volume.
- Communication service providers comprised 71 percent of WDM market revenue in the quarter.
- The year-over-year revenue growth in each region was as follows:
|Regions||Growth Rate in 1Q 2021|
|Europe, Middle East and Africa||10%|
|Caribbean and Latin America||15%|
In an email to this author, Jimmy Yu provided additional information on the optical transport market:
For coherent 400 Gbps, shipment volumes have been growing quite rapidly over the past year. Ciena was first to market with a 400 Gbps coherent solution and was followed by vendors introducing 600 Gbps-capable coherent solutions that can operate at 400 Gbps. The primary buyers of this wavelength speed were the Internet Content Providers (ICPs), often referred to as hyperscale. We think 400 Gbps wavelength shipments will enter the broader market this year (2021) and be a mainstream deployment speed in 2022. So, most if not all vendors have a 400 Gbps offering at this point.
800 Gbps transport has just started with Ciena entering the market first with the WaveLogic 5 based line cards. Other vendors that have a 800 Gbps-capable line card include Huawei and Infinera. (We are expecting only three vendors to have this type of line card in the market.) It is still early days for 800 Gbps, but this technology will be an important driver for delivering longer un-regenerated spans of 400 Gbps and 600 Gbps wavelengths for long haul and subsea applications.
Yes, 5G should drive more optical backhaul and fronthaul. However, with so much optical capacity put in place for 4G, we think the timing for demand generation for 5G backhaul is later. That is, we need 5G roll out to commence outside current 4g coverage areas and for operators to begin 5G densification that will require more fronthaul and backhaul.
The Dell’Oro Group Optical Transport Quarterly Report offers complete, in-depth coverage of the market with tables covering manufacturers’ revenue, average selling prices, unit shipments (by speed including 100 Gbps, 200 Gbps, 400 Gbps, and 800 Gbps). The report tracks DWDM long haul, WDM metro, multiservice multiplexers (SONET/SDH), optical switch, optical packet platforms, data center interconnect (metro and long haul), and disaggregated WDM. To purchase this report, please contact us at [email protected].
Dell’Oro Group is a market research firm that specializes in strategic competitive analysis in the telecommunications, networks, and data center IT markets. Our firm provides in-depth quantitative data and qualitative analysis to facilitate critical, fact-based business decisions. For more information, contact Dell’Oro Group at +1.650.622.9400 or visit https://www.delloro.com.
A different Optical Transport Network report from Market Quest states:
The global Optical Transport Network (OTN) equipment market size is expected to gain market growth in the forecast period of 2020 to 2025, with a CAGR of 4.1%% in the forecast period of 2020 to 2025 and will expected to reach USD 18270 million by 2025, from USD 15550 million in 2019.
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August 26, 2021 Update from Dell’Oro:
Disaggregated DWDM systems revenue outperformed the broader optical transport market in 2Q 2021, growing 36 percent year-over-year while the total WDM market was nearly unchanged from the year-ago quarter. As a result of the strong quarter, the forecast for disaggregated DWDM systems was further raised.
“Disaggregated DWDM systems outperformed the broader market, demonstrating the growing adoption of this platform type,” said Jimmy Yu, Vice President at Dell’Oro Group. “Really what we see is that this type of platform architecture, where transponder units are independent of the line systems, is being more widely embraced beyond the Internet content providers. Also, it is no longer just for metro applications. Recently, the highest growth rates have been from long-haul applications,” added Yu.
Highlights from 2Q 2021 Quarterly Report:
The top manufacturers by revenue share for disaggregated transponder units were Ciena, Infinera, and Cisco.
The immediate need to migrate to higher speed, better performing transponder technology has been one of the main drivers for using disaggregated transponder units. As a result, 400+ Gbps wavelengths were the fastest-growing line speeds on these systems.
The outlook for disaggregated transponder units was raised due to the higher rate of adoption outside of hyperscalers. We now forecast revenue for this equipment type to surpass $2 billion this year.
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