The 100G ROADM market, according to Infonetics' ROADM Components report, may be the savior in the struggling wavelength selective switch (WSS) component market segment.
Led by Alcatel-Lucent (NYSE: ALU), Huawei, Ciena (Nasdaq: CIEN), and Fujitsu, the global WDM ROADM equipment market reached $4 billion in 2012, up 10 percent year-over-year.
However, ROADM WSS component revenue declined more than a quarter in 2012, while sales of ROADM WSS components stabilized during the second half of last year.
"It's been a tough road for WSS components these past couple of years, with quarterly revenue down nearly 50% from the highs two years ago," said Andrew Schmitt, principal analyst for optical at Infonetics Research. "But we believe there's some modest growth ahead tied to the deployment of new 100G coherent systems and the rollout of colorless, directionless and contentionless (CDC) ROADMs."
Schmitt added that despite the growing interest in CDC ROADMs "from vendors, the current pricing premium given to this architecture by equipment vendors will slow adoption."
Both Alcatel-Lucent and Ciena have continued to attract a number of new 100G coherent customers. In Q1 2013, Alcatel-Lucent reported that 100G shipments rose 19 percent and Ciena saw its Converged Packet Optical and Packet Optical revenues rise to $291.4 million and $57.1 million, respectively, in the fiscal second quarter for 2013.
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