The Global Optical Transceiver Market Is Striding to 200G/400G
The demand for higher speed, couple with the prevalence of cloud computing, Internet of Things (IoT) and virtual data center, has driven the prosperity of optical transceiver market. Optical transceiver, Direct Attach Cable (DAC) and Active Optical Cable (AOC) have evolved dramatically to catch leading edge broadband network capacity. The past decades have witnessed massive adoption of optical transceivers with data rates ranging from 1G, 10G and 25G, to 40G and 100G, while higher-speed — 200G/400G is just on the horizon. The sales of optical components grows steadily and is expected to continue in the years to come.
Mature Data Center — 10G, 25G, 40G and 100G
As network gets faster and virtualization gradually becomes the norm, data center is undergoing a major transformation. The trend emerges in the industry signifies a migration toward higher speed transceivers and better service. These transceivers are driving revenue growth which suggests a strong market. The global optical transceiver market is anticipated to reach to $9.9 billion by 2020, driven by the widespread use of 10G, 25G, 40G and 100G optics, and with the biggest sales forecasted for 25G and 100G ports. The imminent 200G and 400G optical transceivers also poise to hold a fraction of the market share.
10G Is Moving to the Edge
Initially offered in the early 2000s, 10G Ethernet has matured now to become a commonplace in data center. 10G server connections reached majority of new shipments and have outpaced 1G connection in 2015. Basically the 10G Ethernet is stacked to move to 40G and 100G at the access layer, following the upgrade path of 10G to 40G and then 100G, which, however, will quadruple the cabling complexity, power consumption and overall cost. And this will be exacerbated when aggregating into 100G (10x10G) interface.
25G Is Paving the Road for 100G
So there comes the game changer — 25G Ethernet for better economics and efficiency. 25G Ethernet makes the road to 100G smoother with reduced cost, lower power consumption and less cabling complexity. SFP28 optical transceiver is designed for use in 25G Ethernet (as well as 32G Fibre Channel and 24.33G CPRI applications), delivering 2.5 times higher speed per lane at lower power. The 25G SFP28 can be viewed as the enhanced version of 10G SFP+ transceiver, utilizing the same form factor but running at 25Gb/s instead of 10Gb/s. Besides, SFP28 is back compatible with SFP+, so it can work sufficiently on SFP+ ports. By the year of 2019, the price of a 25G SFP28 module will be almost the same as a 10G SFP+ module. So data centers could save a great bunch of money when moving to 25G. Some users even plan to skip 10G and directly deploy 25G for better scaling to 50G and 100G.
40G Is Affordable for Mass Deployment
Obviously, 10G is no longer fast enough for data centers handling large-scale applications, so 40G is designed to alleviate bottlenecks in the access layer. When firstly planning to scale to 40G, the cost is extremely high that makes the implement of 40G technology difficult. Luckily, we’ve seen significant cost reduction of 40G optics in the past 2 years. The price drop accelerates 40G transceivers adoption in aggregation links, or in access links to connect servers. For scaling to “spine-leaf” architecture, 40G switches can be used as spine switch with the 40G QSFP+ ports breaking out into 4x 10G SFP+ ports to support 10G server uplinks. 40G port revenue has peaked in 2016 and will now decline in favor of 25G and 50G ports.
100G Is Ramping Up
Currently 100G are the fastest Ethernet connections in broad adoption, which is growing sustainably. And the optical transceiver market indicates that the price of 100G QSFP28 modules will continue to drop, making the cost difference between 40G and 100G much smaller. For example, Gigalight offers great cost reduction on 100G transceivers, such as 100G QSFP28 SR4, 100G QSFP28 LR4, 100G QSFP28 CWDM4, 100G QSFP28 PSM4, 100G QSFP28 CLR4 etc.. Moreover, 100G switch port shipments will outnumber 40G switch port shipments in 2018 — as 25G servers and 100G switches have became commonplace in most hyperscale data centers that replaces previous 10G servers and 40G switches. Optical transceiver manufacturers will continue to grow the products and push the limits of versatility.
The Trend of Next-Generation Data Center — 200G/400G
Another foreseeable trend in interconnect market is the phase out of low speed transceivers in the core of networks and in data centers. So here comes the major shift from 10G and under to 40G/100G and higher. New developments of 100G optics are paving the road for the 200G/400G optics — next-generation data centers will deploy 200G/400G Ethernet in the end of 2018, and become mainstream by 2019–2020. On the whole, optical transceiver market is evolving to higher speed, lower power consumption and smaller form factor. Let’s take a look at these future-proofing optical transceivers.
SFP-DD — Short for Small From-factor Pluggable Double Density, which doubles the SFP28/SFP56 bandwidth (25G/50G) and supports high data rates (50G/100G) while maintaining SFP28/SFP56 backwards compatibility.
QSFP-DD — Quad Small Form Factor Pluggable Double Density, defined by QSFP-DD MSA group, which plans to double the density of QSFP28/QSFP56 module, and specifies eight lanes that operate at up to 25G/50G, so it supports optical transmission of 200G/400G.
Lower Cost Stimulate Popularity — DAC and AOC
DAC and AOC, with their inherent advantage of enhanced signal integrity and superior flexibility, have become the preferred, cost-effective interconnect solution for high-speed links such as 10G, 25G, 40G/100G, and 200G/400G for about all applications in hyperscale and enterprises. DAC and AOC provide improved speed and cost efficiency, they are witnessing tremendous growth in data interconnect market. In 2017, over 100,000 DAC cables for 100Gb/s networks in hyperscale data centers have been shipment, and this is anticipated to continue in 2018. While the global market for AOC is projected to surpass $2 billion by 2020, the sales will keep surging in the years to come.
Conclusion
Data demand will continue to skyrocket. As the vast increases in Internet traffic are pushing optical transceiver market to shift, we can still expect deployment of 10G, 25G, 40G, and 100G Ethernet optics in mega data centers, and 200G/400G in next-generation cloud data centers, to spur market growth. While the lower-cost and power-efficient DACs and AOCs are yielding significant growth in short-distance high speed interconnect. So just stay tuned and embrace the significant opportunities lie ahead for optical transceiver market.
