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Ovum reveals Global OC market sales to hit historic peak of US$10bn in 2018

Global Banking And Finance 1 News

Ovum expects the optical components (OC) market to grow 4 percent in 2013 driven by WAN and datacom demand. Between 2012 and 2018, the global analyst firm predicts that the total OC market will expand at an 8 percent compound annual growth rate (CAGR) to a new high of US$10.5bn, again driven by increasing optics demand in the datacom and WAN segments.

In a new forecast*, the independent telecoms analyst firm identifies datacom, which constitutes components used in data centers and enterprise networks, as the fastest growing segment, driven by demand for 10G, 40G and 100G components to support server, switch and storage connectivity.

Daryl Inniss, Practice Leader of Components at Ovum and author of the forecast, said, “Demand to support data centers for cloud services is a large driver for datacom sales, and high-speed transceivers are needed to support this segment. Datacom is looking at a 16 percent CAGR between 2012 and 2018.”

WAN, the largest OC market segment, is still experiencing annual double-digit traffic growth, leading to high demand for 100G ports. ROADM sales are expected to continue to expand worldwide.

The access segment, which includes FTTx, CATV and optical transceivers to connect base stations to antennae (fronthaul), is declining primarily due to maturing FTTx deployments. “We expect stable performance from fronthaul and CATV throughout the forecast period, but the access segment as a whole is expected to decline at a 7 percent CAGR due to contracting FTTx revenues,” Inniss said.

OC revenue growth is counterbalanced by equipment vendors manufacturing their own components. WAN equipment vendors practice this strategy to “plant iron” and deliver differentiated performance, but ultimately they depend on component vendors to deliver volumes and drive out cost. The 100G market is expected to behave similarly when it hits the mainstream.

Inniss added, “Datacom has depended on component vendors delivering standards-compliant products, but equipment vendors are now developing their own components.”

‘”In a sense, component suppliers are now competing with their own customers. The OC revenue outlook depends on OC suppliers’ ability to drive out cost and deliver products at scale and in a timely manner. While excellent OC execution minimizes the impact of vendors’ captive supply, poor execution reduces the OC vendor revenue opportunity,” Inniss concluded.

 

 

 

 

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