The growing popularity of IP over DWDM (IPoDWDM) and the associated increase in reliance on coherent pluggable modules will dampen sales of autonomous metro optical transport systems, according to a new report from Cignal AI. System providers are expected to start feeling the effects in 2023, predicts the market research company in its latest Report on transport equipment.
The expected trend towards IPoDWDM and coherent pluggables has led Cignal AI to reduce its forecast for spending on autonomous optical transport equipment in 2025 by $ 1.1 billion. This development should particularly affect traditional modular and compact stand-alone equipment which has traditionally supplemented switches and routers. However, sales of these platforms should continue to grow, according to Cignal AI. As shown in the figure above, the company also expects continued sales expansion for open line systems and long-haul WDM, as well as direct sales of consistent optics to hyperscale operators.
“IP over DWDM is a two-decade-old concept, but technical compromises, operational challenges and high costs have prevented its widespread adoption. The Gen60C 400ZR / ZR + plug-in optics can solve these problems with availability to suit the 400 Gigabit Ethernet investment cycle, ”commented Kyle Hollasch, chief analyst for transportation equipment at Cignal AI. “Large-scale data center interconnection will result in the first volumes, but service providers – who are responsible for 75% of optical investments – are expected to launch in 2023, as cost savings from IP over DWDM become impossible.” to ignore. ”
The new report focuses on activities for the third quarter of this year. Combined sales of optical networks and IP switching and routing fell 2.5% in the quarter, driven by double-digit declines in China for the second consecutive quarter. On the positive side, sales in North America increased for the fourth consecutive quarter and reached the first quarter of year-on-year growth since the second quarter of 2020. Revenue from sales to EMEA also increased from quarter to quarter. of the previous year. Sales of package transport equipment in Japan also increased 10% year-on-year.
From a market share perspective, Fujitsu and Cisco benefited the most from the North American strength, while ADVA, Infinera and ZTE saw their shares of the EMEA pie grow by double digits at the expense of Huawei and Nokia.
Cignal AI’s Quarterly Transportation Equipment Report examines optical and packet transportation equipment revenue across all regions and all types of equipment. Equipment categories include metro WDM, long-haul, and undersea WDM (SLTE) optical equipment, as well as access, aggregation, edge, and basic packet equipment in six regions around the world. Suppliers mentioned in the report include Adtran, ADVA, Alaxala, Ciena, Cisco, Ekinops, Fiberhome, Fujitsu, Huawei, Infinera, Juniper, Mitsubishi Electric, NEC, Nokia, Padtec, Ribbon, Tejas, Xtera, ZTE as well as others .
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