Report: Optical components market growing; 100G WAN, 10G/40G datacom, FTTA equipment seen gaining
Vendors have good reason to be optimistic about 2014 and beyond, reports the analyst firm.
The global optical components (OC) market posted revenues of $6.8 billion in 2013, up 3% from the 2012 level, according to the latest report from market research firm Ovum. "Although the market posted a low-single-digit sequential decline in 1Q14, partly due to annual telecom price declines that take effect in the first quarter of the year, it expanded compared to the year-ago period," said Daryl Inniss, practice leader for telecoms components at Ovum.
Vendors have good reason to be optimistic about 2014 and beyond, Innis added. Ovum expects the OC market to expand 8% in 2014, in part to support continuing annual double-digit network traffic growth and the infrastructure needed for cloud services. Demand for 100G metro–optimized transmission gear will begin and shipments will ramp in 2015, the firm believes. Multiple component vendors have introduced components and pluggable optics for 100G DWDM in anticipation of the metro need. Opportunities are also emerging in data center networks for high-speed interconnects.
The growth in optical component sales in 2014 follows a respectable 1Q14. The market posted a 1% decline sequentially but grew 7% compared to the year-ago period. Ovum points out that 1Q14 marks the fourth consecutive quarter with revenue growth compared to the year-ago period and commented that the market “is moving along at a nice pace when compared to the year-ago period.”
Demand for 100G components for coherent transmission in WAN, datacom transceivers at 10G and 40G, and fiber-to-the-antenna (FTTA) transceivers is expected to continue. Traffic continues to increase, and high-speed optics being used in new applications are helping to drive the market forward. Further, the WAN segment, which includes components in telecom carriers’ core and metro networks, continues to be the largest segment and is forecasted to grow at a compound annual growth rate (CAGR) of 11% to $7 billion in 2019. Demand for 100G components and modules is a big driver for growth in WAN. Ovum expects strong demand for pluggable coherent transceivers in 2015.
ROADMs and amplifiers posted a weak 2013, and Ovum expects this weakness to continue in 2014. However, the analyst firm believes that the market will start to ship colorless, directionless, and contentionless ROADMs with flexible grid in 2015 and grow from there. Some growth will come from sales of Raman amplifiers, particularly at the end of the forecast period, to support longer-distance transmission for data rates beyond 100G.
Datacom will be the fastest-growing segment, expanding at a 16% CAGR to reach $4.2 billion in 2019. The market is led by demand for 10 and 40G components in the early years and then 100G in the later years driven by the availability of server ports supporting data rates greater than 10G. Optical components in access – including CATV, FTTx, and optical transceivers for fiber-to-the-antenna – are forecast to decline at a 2% CAGR to $1.1 billion in 2019. The decline will be driven by price declines in FTTx applications, even though volumes are nearly constant through the forecast period.