Ongoing sales of DWDM equipment, particularly platforms that support 100G wavelengths, will drive up total optical transport revenues to $15 billion by 2018, says Dell'Oro Group in its latest report.
The research firm said it expects the DWDM market to grow at an average annual rate of 8 percent through 2018 and for 100 Gbps wavelengths to contribute the largest share of DWDM capacity shipments, approaching 80 percent by 2018.
Another element of this growth will be the movement toward OTN and packet transport. Dell'Oro expects that packet optical transport systems (P-OTS) revenue will grow at a 15 percent compounded annual growth rate. Much of this spending will take place in the metro network where service providers are upgrading capacity to deal with a host of new enterprise and wholesale service needs such as Ethernet and wireless backhaul.
"The most significant of a number of trends unfolding in the optical market is the rapid expansion of 100 Gbps DWDM wavelength shipments, as its use moves beyond the core network and into the metro network," said Jimmy Yu, vice president of Optical Transport Market Research at Dell'Oro Group. "This projected demand for 100 Gbps will subsequently be one of the key growth drivers for the optical market over the next five years."
This is great news for optical vendors such as Huawei, Ciena (Nasdaq: CIEN) and Alcatel-Lucent (NYSE: ALU), all of which reported 4 percent growth in year-over-year WDM spending in the third quarter. Alcatel-Lucent, for one, reported in Q3 2013 that its WDM portfolio revenues grew 10 percent due to deployments by carriers in the Americas and Asia Pacific.
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