Recent optical network equipment sales in North America were quite encouraging – up more than 25% for 4Q19 and 10% for all of 2019, according to the most recent Transport Hardware Report.
“After three years of North American spending declines as operators focused capex on wireless and access, optical hardware sales in the region revived and grew at a healthy pace for 2019, while packet hardware sales remained flat,” said Scott Wilkinson, Lead Analyst at Cignal AI. “Market leaders Ciena, Infinera, and Cisco all achieved optical sales growth exceeding 25% in 2019.”
Manufacturing at Huawei in Dongguan appears to be close to resuming normal levels of operation, although installation activity underway in China is still not clear. Ciena indicated a revenue impact of $30M during an earnings call in early March. It’s unclear right now what the ultimate impact will be; time will tell. We will revisit projections in April with the hope that events will be more certain at that time.
OFC was severely impacted when almost all major exhibitors pulled out of the show as health concerns mounted. The organizers did an admirable job of salvaging the technical sessions via Zoom teleconference.
Cignal AI will deliver a wrap-up report summarizing many of the important announcements that companies intended to make during the show. Look for it in the coming weeks, and if you have important news or perspective to share – contact us!
Separately, a newly released report by 650 Group states that the Optical Transport Network market revenues increased 5% Y/Y in 4Q19. Revenues in four of the six geographic theatres experienced year over year growth, with North America having been the most robust.
“For the full year 2019, the top five Hyperscalers experienced the most growth out of any customer segment we track and has consistently been a top-performing customer segment in recent years,” said Chris DePuy, Technology Analyst and Founder at 650 Group. “Top vendors in the market are expecting their 800 Gbps optical transport technology to contribute to revenues towards the end of this year, 2020. We expect that optical transport systems companies that ship this new technology early will be well-positioned to take on the potential substitution threat of optical modules on switches and routers in the coming years.”
The forecast section of this report has been updated to reflect changes in both demand and supply related to health fears that have emerged in 1Q20. The report also reflects quantitative Data Center Interconnect (DCI) deployment scenarios across long-haul, metro, cloud, colocation, and telecom service providers.
For more information about the report, contact:
Additional 4Q19 Transport Hardware Report Findings:
Transport Hardware Superdashboard:
About the Transport Hardware Report
About Cignal AI:
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|About Cignal AI|
|Cignal AI provides active and insightful market research for the networking component and equipment market and the market’s end customers. Our work blends expertise from a variety of disciplines to create a uniquely informed perspective on the evolution of networking communications.|
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by Cignal AI staff
Cloud and colocation (colo) operator spending on optical communications hardware continued to spur market growth in the first quarter of 2019, according to the most recent Optical Customer Markets Report from research firm Cignal AI. Cloud and colo spending increased over 50% in North America, offsetting declines in other regions, with Ciena continuing to lead all sales to cloud operators.
In EMEA, traditional telco (incumbent and wholesale network operators) optical spending recovered and will grow by double digits during 2019. Spending growth by these operators is slowing in APAC as total spending reaches record highs. Huawei continues to lead this market in APAC, EMEA, and CALA, while Ciena leads in North America.
“Optical spending in North America continues to shift from traditional telco providers to the cloud and colo operators,” said Scott Wilkinson, Lead Analyst for Optical Hardware at Cignal AI. “Despite traditional telco operators accounting for most spending, the rapid growth in cloud spending combined with traditional operators now adopting cloud architectures has permanently changed supplier R&D priorities.”
The Cignal AI Optical Customer Markets Report is issued quarterly and quantifies optical equipment sales to five key customer markets: Incumbent, Wholesale, Cloud and Colo, Cable/MSO, and Enterprise and Government.
The latest report is now enhanced and includes optical equipment vendor market share for all customer markets as well as updated forecasts through 2023.
Additional findings in the 1Q19 Optical Customer Markets Report include:
- Ciena Waveserver Ai market share continues to increase as cloud & colo spending grows. New compact modular platforms targeted at this market are entering the market in 2Q19 with Cisco, Infinera, and Nokia among those expecting stronger sales in the next quarter.
- North American cable/MSO spending declined in the first quarter. However, moderate growth is still expected in 2019.
- Enterprise and Government spending shows pressure from consolidation and Cloud and Colo encroachment and isn’t expected to recover in the next two years.
About the Optical Customer Markets Report:
The Cignal AI Optical Customer Markets Report tracks optical equipment spending by end customer market type. It provides forecasts based on expected spending trends by regional basis. The report includes revenue-based market size and share for all end customer markets across all regions.
Vendors examined include Adtran, ADVA, Ciena, Cisco, ECI, Ekinops, Fiberhome, Fujitsu Networks, Huawei, Infinera, Juniper Networks, Mitsubishi Electric, MRV, NEC, Nokia, Padtec, TE Conn, Tejas Networks, Xtera and ZTE.
About Cignal AI:
Cignal AI provides active and insightful market research for the networking component and equipment market and the market’s end customers. Our work blends expertise from a variety of disciplines to create a uniquely informed perspective on the evolution of networking communications.
To purchase the report contact: email@example.com
July 25, 2019 Update-CignalAI comments on Cisco-Acacia:
Two weeks ago, Cisco announced it was acquiring Acacia, a move that could transform the company into a market leader in a new era of pluggable coherent optics and disaggregated networks. Cisco was already a growing customer for Acacia and was poised to be one of the leading consumers of Acacia’s AC1200 module that is now reaching the market. Between Cisco’s previous Luxtera acquisition for short-reach optical technology and its current addition of Acacia for long reach coherent, the company will have deep vertical integration.
|Compact modular optical hardware is being used in more network applications than ever before, driving up sales during the first quarter of 2019 as reported in the latest Optical Applications Report. Worldwide, compact modular hardware sales are tracking to exceed $1 billion in revenue this year.|
Separately, CenturyLink says it has completed the first of a two-phase build out that will see its fiber-optic networks in the U.S. and Europe grow by 4.7 million fiber miles. The new fiber infrastructure leverages ultra-low-loss fiber from Corning (NYSE: GLW) and will support businesses, government agencies, and other service providers who want access to fiber.
The first phase, completed in June, addressed CenturyLink’s U.S. requirements and connected more than 50 cities via 3.5 million new fiber miles. The European work, slated to finish in the first part of 2021, will see 1.2 million fiber miles installed. Both deployments leverage CenturyLink’s multi-conduit infrastructure, which the company says enables quick and economical fiber deploy and capacity expansion.
CenturyLink’s expanded fiber network connects more than 50 locations in the U.S. Image courtesy of Century Link
“Our newly built intercity fiber network, created with the latest optical technology, is another example of how our diverse fiber assets differentiate us from other network providers,” said Andrew Dugan, CenturyLink chief technology officer. “Our multi-conduit infrastructure has a significant amount of capacity for supporting the growing demand for fiber and will allow us to quickly and cost effectively deploy new fiber technology now and in the future. This uniquely positions CenturyLink to meet the needs of companies seeking highly reliable, low-latency network infrastructure designed to move massive amounts of data.”
CenturyLink was able to quickly and cost effectively complete the first phase of the project using multi-conduit infrastructure already in place. The company is currently selling routes to large enterprise companies and content providers in the U.S. and will work with customers to add additional routes as needed.
- CenturyLink is creating an extensive 4.7-million fiber mile intercity fiber network across the U.S. and parts of Europe.
- The first phase, comprising 3.5 million fiber miles, was completed in June. An additional 1.2 million fiber miles will be added by early 2021.
- CenturyLink is currently selling fiber routes to large enterprise companies and content providers in the U.S.
- Multi-conduit infrastructure allows CenturyLink to quickly and economically deploy new fiber technology or add network capacity as needed.
- The investments in the first phase of the fiber upgrade are included in CenturyLink’s full year 2019 capital expenditure outlook.
- The expanded fiber network utilizes Corning’s SMF-28® ULL fiber and SMF-28® Ultra fiber, creating the largest ultra-low-loss fiber network in North America.
Almost 30% of North American Optical Hardware Shipments Now in Compact Modular Format
by Cignal AI staff
Compact modular optical hardware is being used in more network applications than ever before, driving up sales during the first quarter of 2019 as reported in the latest Optical Applications Report from market research firm Cignal AI.
Compact modular optical systems were first used by cloud operators for data center interconnect applications but have since expanded well beyond into many other operators and applications. Market share leaders include the Ciena Waveserver, Infinera CX and Groove, and Cisco 1000 series.
The report illustrates significant growth throughout most regions as the compact modular customer base expands beyond cloud and webscale operators to include traditional telco customers pursuing network disaggregation. Compact modular hardware sales exceeded $275 million in Q1 and are tracking to exceed $1 billion in revenue this year. Growth was most pronounced in North America this quarter, where it accounted for almost 30% of the entire optical market and is expected to continue advancing through 2023.
“Network applications for the compact modular form factor have expanded well beyond the original data center interconnect deployments,” said Scott Wilkinson, Lead Analyst for Optical Hardware at Cignal AI. “Applications now include traditional telco networks, metro and long haul deployments, and even some early trials for subsea deployment. We expect this spending trend to increase in 2019 as new compact modular products come to market from a variety of vendors.”
Cignal AI’s 1Q19 Optical Applications Report details market share for the first quarter of 2019 and provides forecasts in three key markets: compact modular equipment, advanced packet-OTN switching hardware, and 100Gbps+ coherent WDM port shipments across multiple speeds. Hardware and coherent port shipments are forecasted through 2023. The Applications Report is issued quarterly.
Additional 1Q19 Applications Report Key Findings:
Ciena expanded its dominance in compact modular with over 50% market share in Q1. The combined Infinera/Coriant held on to second place despite declining sales.
Acacia  AC1200-based platforms are expected to have an impact starting next quarter. Cisco (which is acquiring Acacia) compact modular sales paused in Q1 in anticipation of the NCS1004 platform.
Note 1. Cisco and Acacia Communications entered into a definitive agreement under which Cisco has agreed to acquire Acacia for a consideration of US$2.6 billion.
Almost 500k physical coherent ports have shipped in the last 12 months. Currently, over 70% of coherent ports are shipped by the top five vendors in the market.
After a 2018 recovery year, long haul port shipments are starting to pick up. Metro growth is advancing at a similar pace, as next-generation coherent enables an upgrade from 100Gbps.
Packet OTN growth is slowing. New deployments are limited to China and parts of APAC as networks in other regions evolve away from the packet OTN architecture.
About the Optical Applications Report:
The Cignal AI Optical Applications Report includes market share and forecasts for revenue and port shipments for optical equipment designed to meet the needs of specific applications: 100G+ coherent, and compact modular and advanced packet-OTN switching hardware.
Vendors examined include Acacia, Adtran, ADVA, Ciena, Cisco, ECI, Ekinops, Fiberhome, Fujitsu, Huawei, Infinera, Inphi, NEC, Nokia, NTT Electronics (NEL), Padtec, Tejas, Xtera and ZTE.
Deliverables include Excel files with complete data sets, PowerPoint summaries and Cignal AI’s Active Insight news reporting. Cignal AI clients with Applications report subscriptions may access this material on the Cignal AI website.
About Cignal AI:
Contact Us/Purchase Report:
Web: Contact us
by Scott Wilkinson and Andrew Schmitt of Cignal AI (edited by Alan J Weissberger)
Metro Bandwidth Growth Outpaces Long Haul; North America Remains Weak
Japan continued its recent hot streak as 1Q2019 marked the fourth quarter in a row of growth with an extraordinary 82% increase, according to the most recent (1Q2019) Optical Hardware Report from research firm Cignal AI. Japan registered an extraordinary 82% year-over-year increase in optical networking hardware sales in the first quarter of 2019. Prime beneficiaries were domestic suppliers NEC, Mitsubishi and Fujitsu along with Ciena and Nokia, all of which posted significant gains during the quarter.
“The exceptional optical market growth in Japan is the story to watch for 2019,” said Scott Wilkinson, Lead Analyst for Optical Hardware at Cignal AI. “Network operators have begun significant network rebuilds and expansions, and domestic as well as non-Japanese vendors continue to grow sales in the region at remarkable rates.”
North American growth continued to disappoint as slow optical hardware spending among traditional telco operators obscured growth in sales to cloud and colo operators (e.g. multi-tenant data centers).
Additional key findings in the 1Q19 Optical Hardware Report:
- Metro Bandwidth Outpaces Long Haul – While long haul spending grew at a higher rate than metro, analysis reveals that metro bandwidth is growing more rapidly.
- Growth in China Decelerates – Growth in China moderated into the single-digits during 1Q19, as 2018’s high spending by Chinese carriers could not continue indefinitely.
- EMEA Posted Solid Gains – Both metro and long haul spending grew during the quarter, with growth led by both traditional and cloud & colo operators.
- CALA Continues Lackluster Performance –Q1 showed no improvement for the region. Relief may be coming, as vendors believe major carriers in the region will return to spending later this year.
Cignal AI’s Optical Hardware Report is issued each quarter and examines optical equipment revenue across all regions and equipment types. The analysis is based on financial results, independent research, and guidance from individual equipment companies. Forecasts are based on overall spending trends for equipment types within the regions.
Cignal AI’s interactive Optical Hardware Superdashboard is available to clients of the Optical Hardware Report and provides up-to-date market data for real-time visibility on individual vendors’ results. Users can manipulate data online and see information in a variety of useful ways.
The Cignal AI Optical Hardware Report is published quarterly and includes market share and forecasts for optical transport hardware used in optical networks worldwide. In addition to the interactive tracker, the analysis includes an Excel database as well as PDF and PowerPoint summaries. Subscribers to the Optical Hardware Report also have access to Active Insight, Cignal AI’s real-time news service on current market events.
The report examines revenue for metro WDM, long-haul WDM and submarine (SLTE) equipment in six global regions and includes detailed port shipments by speed. Vendors in the report include Adtran, ADVA, Ciena, Cisco, ECI, Ekinops, Fiberhome, Fujitsu, Huawei, Infinera, Mitsubishi Electric, NEC, Nokia, Padtec, Tejas, Xtera, and ZTE.
Full report details, as well as articles and presentations, are available on the Cignal AI website.
About Cignal AI
As optical networking evolves, industry changes emphasize the increasing importance of software in optical communications. Today’s software research extends beyond SDN/NFV to address control and optimization of transmission systems, network planning, and device design, and OFC’s Demo Zone picks up on this trend.
“OFC allows to us explore the latest software developments and discuss emerging trends,” said Laurent Schares, IBM Research, USA, an OFC 2019 general chair. “Now is the time to address operational strategies, use cases and field deployments — and demonstrations drive that point home.”
OFC 2019 expanded this year’s Demo Zone to reflect industry evolution. The Demo Zone will feature live demonstrations of key software functions and tools for optical communication devices, systems and networks. From AI engine cooperation to an open dis-aggregated transport network and beyond, the OFC Demo Zone addresses topics of coordination and collaboration between systems and organizations. These proof-of-concept and research demonstrations offer an opportunity for small group, interactive dialogue, featuring real-time exchanges between attendees and presenters.
5G related symposia at OFC 2019:
5G Trials, Pilots, and Demonstrations, Monday, 4 March, 08:00 – 16:00
Organizers: Thomas Pfeiffer, Nokia Bell Labs, Germany; Jun Terada, NTT, Japan; Shan Wey, ZTE, USA
The fifth generation mobile networks (5G) have promised to transform mobile broadband services through a new network architecture that will enable significantly faster access speed, ultra-reliable low latency communications, and massive machine-to-machine communications, not only for mission critical applications but for everyone everywhere. As the industry is progressing towards 5G standards and 5G capable technologies, the deployment of 5G networks is about to become reality as evidenced by the flood of new product announcements and field trial reports by network operators.
This symposium is intended to update the OFC community about the latest progress of 5G trials, pilots, and demonstrations. Use case scenarios involving a wide range of relevant vertical sectors, e.g., mobile broadband access, connected transport, digital health, smart cities/venues, creative media, will be discussed. By reporting on recent progress, we hope to highlight the role of photonic technologies in delivering 5G network solutions and further inspire and challenge the photonics industry to advance developments targeting the future mobile communication networks.
The symposium is divided into three sessions. The first session will focus on 5G requirements and how major system vendors will realize x-haul transport over optical systems. The second session will provide insight into the perspectives and first experiences of leading telecom network operators and industrial players using 5G technologies. The third session finally will showcase future applications and field trials related to public sector initiatives.
Session 1 – 5G Trials: Vendor’s Perspective
Monday, 4 March, 08:00 – 10:00
Francis Dominique, Nokia, USA
Requirements of 5G Radio Netwoks on Optical X-haul Transport
The high data rate and very low latency applications supported by 5G require an appropriate transport network to meet the requirements of these applications. This paper provides an insight to the requirements imposed by 5G radio access networks (RAN) on front/midhaul transport.
Li Mo, ZTE, China
ZTE’s 5G Trials
Stefano Stracca, Ericsson, Italy
Network Convergence in 5G Transport
Soundarakumar Masilamani, C-DOT, India
5G Rural Strategy in India
Session 2 – 5G Trials: Network Operators’ and Vertical Industries’ Perspective
Monday, 4 March, 10:30 – 12:30
Kent McCammon, AT&T, USA
Recent Progress of AT&T’s 5G Trials
Yukihiko Okumura, NTT DoCoMo, Japan
5G Trials in Japan
Walid Mathlouthi, Google, USA
Regulatory Aspects for 5G to Enable New Business Models
Yuji Inoue, Toyota InfoTechnology Center, Japan
Session 3 – 5G Trials: Public Sector Initiatives
Monday, 4 March, 14:00 – 16:00
Dimitra Simeonidou, University of Bristol, UK
Test Bed and Trials for 5G Content Delivery in England
Harald Haas, University of Edinburgh, UK
5G Rural Trials in Scotland
Dan Kilper, COSMOS-PAWR, USA
COSMOS: An Advanced Optical and Wireless Networking Testbed in NYC
Moises Ribeiro, Universidade Federal do Espírito Santo, Brazil
5G Research and Testbeds in Brazil
By Heidi Adams, executive director, network infrastructure, IHS Markit
Each year IHS Markit surveys service providers, in order to find out which companies they view as the leaders of the optical equipment market. The survey also explores their perceptions of vendors in key decision metrics, like pricing, total cost of ownership, technology innovation, research-and-development (R&D) investment, and product reliability.
Following are some of the key findings from this year’s survey:
Optical equipment vendor leaders:
In brand awareness, respondents perceive Ciena, Huawei, and Nokia as the overall leaders for optical transmission and switching equipment in 2018, with no change in the rankings from last year. These results are well aligned with positioning in the global optical network hardware market in the first three quarters of 2018, where Huawei, Ciena, and Nokia were ranked as the top three vendors by market share in this period.
Ciena was the most cited leader in optical DCI, with Huawei and Infinera tied for second place. Ciena also made significant strides this year in market perception for leadership in optical disaggregation, rising from third position in our 2017 survey to first-ranked position in 2018. Coriant (now Infinera), Huawei and Nokia all tied for second place.
IHS Markit survey respondents were also asked to identify the leaders in purchasing criteria, including pricing, technology innovation, product reliability, service and support and investment in research and development. The top three vendor selection criteria for optical equipment purchasing decisions in 2018 were, as follows:
- Product reliability
- Total cost of ownership
Ciena was the leader in 2018 for service provider perception of vendor leadership in product reliability, technology innovation, management software, and investment in research and development. Huawei topped the list for service provider perception of vendor leadership in pricing, total cost of ownership, solution breadth, and financial stability. Nokia was perceived as the leader in service and support for optical networks.
This survey explores how service providers evaluate and select optical transmission and switching equipment suppliers. It covers vendors installed and under evaluation and service provider opinions of vendors, including on key vendor selection criteria.
Cignal AI on OFC 2019–
400ZR Steals the Show:
No single topic at OFC will command as much attention as 400ZR, which is based on fourth-generation coherent technology and an OIF standard for coherent short reach DCI applications. Product development is well underway with over a dozen component and equipment companies spending in excess of $300M in this effort. The market for short reach coherent extends well beyond the DCI needs of Microsoft and Google. Derivatives (known as ZR+ or ZR plus) are emerging which are designed to meet the broader needs of network operators everywhere. ZR is the first coherent technology that will be both standardized and pluggable, and the emergence of ZR products will shake up the optical equipment landscape. One major impact is that 10G WDM will become obsolete in its only remaining stronghold- the edge of the optical network. The greater question is what role standalone optical hardware will play in the network as the performance and interoperability of coherent pluggables improve. Expect a cascade of activity at OFC from component and equipment companies as they uncover their ZR plans and demonstrate the latest optical engines, and some bombshell announcements and partnerships from the leaders in this space – Inphi, Acacia, Ciena, Cisco, Huawei, Nokia, and NTT Electronics.
While fourth-generation 400G products have been announced at OFC already for the last two years, 2019 is the year that these products start deploying for revenue. Starting in early 2019, third generation solutions from Acacia (via multiple hardware vendors), Nokia, Huawei, Fujitsu, and Infinera will join Ciena in live network deployments. Now that 400G is deployed, there will be multiple roadmap announcements at OFC seeking to leapfrog 400G and propose the next generation of coherent optical speeds. 600G is a given, but there will be 800G and perhaps 1Tbps announcements as well. Components suppliers and equipment manufacturers will show roadmaps to higher speed sixthgeneration coherent optical components in preparation for a 2020 introduction.
We expect Infinera to disclose more detail on its ICE6 R&D efforts and would not be surprised to hear Ciena talk about a successor to the Wavelogic AI now that competitive products are arriving in the market.
Disaggregation Continues, with Many Definitions:
The disaggregation trend will continue to gain strength at OFC, but the definition will continue to change. Whereas the original concept was complete separation of switching transponders, ROADMs, and perhaps even components into separately manageable elements, now new solutions are starting to look more like traditional optical equipment. Compact modular systems, which are the most visible components of a disaggregation strategy, have moved from monolithic transponder or open line systems to more complex devices that can include switching and multiple functions in the same shelf. Some systems now even have modularity via cards (although they are called “sleds” rather than “cards”), making them look more like traditional systems in everything but physical dimensions. Several large operators are skeptical about disaggregation, while several others agree with the concept but consider current solutions too difficult to manage. Regardless, the industry-wide shift to disaggregation will accelerate as implementation becomes easier and better attuned to the needs of a wider variety of customers. General availability and customer announcements for 2019 are expected from several vendors, including ADVA, Cisco, Coriant, Fujitsu, and Nokia. In addition to the compact modular announcements,