Dell’oro Predicts The Optical Transport Market In 2021: 400Gbps Will Be Everywhere

A few days ago, Dell’Oro Group analyst Jimmy Yu had an outlook on the optical transport market in 2021. Jimmy Yu pointed out that the development of every market and industry has a cycle. In fact, there are many different cycles in some industries, and the combination of these cycles has an impact on the growth and development of the entire market. Among the different cycles affecting the optical transport market, the best cycle to highlight for 2021 is the “product cycle”.

As we all know, the optical transport equipment market is a R&D-intensive industry, and the product cycle generally takes several years, including conception, R&D, release, and large-scale deployment. Therefore, the grand ideas and proofs of concept announced many years ago will steadily develop towards commercialization and large-scale applications in a few years.

So, which phase are we predicting for 2021? Jimmy Yu said that in many areas of the optical transport market, many products are entering the main stream deployment phase from the introduction stage. Therefore, Dell’Oro Group’s market expectations for 2021 are all around the application of new products (many of which were first released over two years ago). The following are some expectations of Dell’Oro Group for product application in 2021.

Disaggregated WDM system will extend beyond DCI applications

Open and disaggregated WDM systems have been introduced for many years, but the main buyers were hyper scale companies for data center interconnection (DCI). Recently, the use of these systems has expanded beyond these Internet content providers (ICPs) to a wider customer base, including cable multi-service operators (MSOs) and telecom operators.

600 Gbps and 800 Gbps-capable line cards will enter main stream adoption.

Although 600 Gbps-capable line cards entered the market over a year ago, the adoption rate is very low due to various reasons including the pandemic. However, Dell’Oro Group believes that the adoption curve of this type of product has entered an inflection point and will usher in rapid growth in 2021. At the same time, considering that only one manufacturer is shipping in batches so far, it is believed that the shipments of 800 Gbps-capable line cards will increase next year, and there will be another one or two vendors will be shipping 800 Gbps-capable line cards in volume next year. All combined, Dell’Oro Group predicts that in 2021, shipments of 600 and 800 Gbps-capable line cards will increase more than three times.

400 Gbps everywhere.

Although shipments of 600 Gbps and 800 Gbps-capable line cards will grow substantially, it is expected that many (most likely the majority) of them will be used to provide 400Gbps wavelengths in metro, regional, and long haul networks. In other words, operating line cards with the highest modulation (such as 64 QAM) will be limited, and more will be operated with lower modulations (such as 16 QAM and 32 QAM), because the lower modulations can provide better performance. In addition, 400ZR is entering the market for use in metro access applications such as DCI, most of which will be used in a QSFP-DD form factor in both optical and Ethernet systems. Therefore, by the end of 2021, we predict that 400Gbps will be in heavy demand in all parts of the optical network.

In some respects, Dell’Oro Group remains optimistic outlook for the optical transport market in 2021, partly because it is a key component of maintaining world interconnectivity. At the same time, we also hope that with the widespread popularity of the COVID-19 vaccine, the pandemic that has caused difficulties in 2020 will be eliminated in 2021. Of course, it will take more than a year to restore the world economy to pre-pandemic levels, depending on the actions of the respective governments.