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March 14, 2007

Research Firm CIS Reports on State of 40 Gbps Technology Market for Telecom Equipment Manufacturing

It’s a trend seen across all high-technology industries: the need for components that are perform at increasingly fast speeds while cramming more storage into smaller spaces, yet remain able to stay cool under pressure, as it were.
One of those industries is telecommunications equipment manufacturing, where 40 Gbps transponders and other components are becoming more and more popular. CIR, a market research and consultancy firm based in Virginia, commented on this trend Wednesday in the latest installment of a series of reports about the optical networking modules and components market.

CIR predicted, based on its research, that telecom equipment manufacturers will purchase about $500 million worth of 40 Gbps transponders/components by 2012.
In recent years, 40 Gbps components, CIR noted, ran the gamut from over-hyped next-big-thing to dead and buried, but have now remerged as a hot topic of conversation in the telecom equipment manufacturing market. Why should this be? CIR’s answer is that the technology has improved, and real-world deployments are now underway (or soon will be) that make it relevant.
Although it has enjoyed revival as a talking point, CIR cautions that industry-wide 40 Gbps roll-outs probably won’t ramp up until 2010, meaning that much of the to $500 million will occur in the final two years of the time period mentioned above. If 40G eventually achieves the market dominance that 10G now enjoys, this won’t happen until at least 2015, CIR predicted.
Currently, CIR said, 40 Gbps deployments are mostly limited to core routers. A few carriers, though (including AT&T (News - Alert), Sprint, SOFTBANK), have announced plans to upgrade their backbone networks to 40 Gbps from the present 10G standard.
Despite the slow adoption of 40G in the telecom market, CIR nonetheless sees several key drivers for the newer technology, including cost reductions and meeting bandwidth demands.

”The most important recent innovation has been the emergence of advanced optical modulation schemes and improved dispersion compensation, both of which make 40 Gbps transmission over existing networks a much more practical proposition,” CIS noted in its report.
CIS added: “40 Gbps also offers operational advantages inherent in the technology in that most network engineers believe that routers work at a much higher rate of efficiency if bit streams remain intact rather than carried as several lower-rate channels. And 40 Gbps SONET provides this capability in a way that say Ethernet cannot match.”
Most of the large telecom equipment component and module manufacturers, CIS said (e.g. JDSU (News - Alert), Avanex, Finisar, Bookham), have not yet entered the 40G market, but that likely will soon change.
“Modules and components firms are extremely affordable and it would not take much to acquire some of the smaller firms out there,” CIS predicted. “Firms like Apogee, CoreOptics, Inphi, Kailight, Picometrix or Teraxion could be absorbed in the next two to three years.”

Be sure to check out TMCnet’s White Paper Library, which provides a selection of in-depth information on relevant topics affecting the IP Communications industry. The library offers white papers, case studies and other documents which are free to registered users.

Mae Kowalke previously wrote for Cleveland Magazine in Ohio and The Burlington Free Press in Vermont. To see more of her articles, please visit Mae Kowalke’s columnist page. Also check out her Wireless Mobility blog.


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