LightCounting Hosts OFC2011 Dinner & OFC Market Watch Panel

LightCounting Hosts OFC Dinner 

LightCounting held a dinner reception with analyst presentations at the Optical Fiber Conference (OFC 2011) in Los Angeles, CA March 6-10. We initially planned for 20-30 people over a pot of coffee and stale donuts but RSVPs swelled to over 150 executives who joined us for several hours of schmoozing, dinner and presentations from the now five analyst team at LightCounting. Although, we at LightCounting would like to believe the high attendance was due to our vast and deep industry knowledge and good looks we were told it probably had more to do with the incredible marketing power of ….free beer! Below is a brief summary of what we presented. Presentations in pdf format are available for attendees of the event and all of our clients. Please contact Renee Isley at renee@LightCounting.com to get a copy.

Vladimir Kozlov gave an overview of the health of the optical components business and discussed the LightCounting methodology, data collection, and modeling process that underlie much of our forecasts. Vlad presented charts of quarter by quarter shipments for several transceiver segments showing how the different transceiver segments reacted to the economic downturn and recovery. Vlad stated, “It looks like the optical transceiver industry is back on track and growth is resuming again in both telecom and datacom. Shipments of 10G SFP+ transceivers tripled in 2010”. SFP+ modules are used to connect servers, switches and telecom systems and delays in the copper 10GBASE-T have favored the use of low-cost and low-power optical connections. Vlad stated that FTTx, tunable lasers and DWDM transceivers were all trending upwards and noted that LightCounting is now covering the emerging area of transceivers supporting wireless infrastructure. Market outlook for 2011-2015 is summarized in the latest Optical Communications Market Forecast Report and Database.

David Krozier discussed the market for 40 and 100G DWDM optics and some trends and graphics from his upcoming report on the 100G Foodchain. Dave noted 10G networks are facing exhaustion from enormous growth rates in IP traffic and that by 2015, 40G and 100G line cards will have nearly equal revenue share of market. Dave stated, “40G systems are now moving into wide scale deployment transitioning from DPSK/DQPSK to DP-QPSK and 100G systems are in the ‘early adopter’ phase headed for general deployment in 2013”. Dave researches long haul, metro and access optical systems having recently joined the LightCounting team from Fujitsu Networks. Dave previously worked with both Vlad and Brad at RHK several years ago covering optical systems. Watch for Dave’s 100G Foodchain Report in April.

Focusing on the hot area of datacenter interconnects; Kimball Brown and Brad Smith discussed short reach copper and optical interconnect issues.

Kimball Brown presented his unique views on the 10G optical SFP+ and 10GBASE-T copper market with some optical and copper port projections from his new report on 10GBASE-T. Kimball also covers Fibre Channel and FCoE, the topics of an upcoming report. He noted that while Fibre Channel is well underway transitioning to 8G. Further, he noted that Fibre Channel-over-Ethernet (FCoE) will have its only impact as a means to connect blade servers to top-of-rack switches over the next few years. SFP+ optical 10G transceivers are shipping well ahead of the copper 10GBASE-T ports today. However, that will begin to shift later in 2011 as a new version of 10GBASE-T silicon will enable 10GbE adapters that will drive adoption. Kimball stated, “LightCounting forecasts that 10GBASE-T will overtake optical by 2014 when the chips are integrated onto the server motherboards leaving the door open until then for optical SFP+ and Direct Attach copper to gain share”. Kimball recently joined the LightCounting team having worked with Brad at Dataquest/Gartner Group. Kimball was also a Wall Street analyst and a VP at two server chip startups sold to Broadcom and Emulex. Kimball covers datacom enterprise networking, servers, Fibre Channel and recently authored a report titled 10GBASE-T to Dominate Ethernet.

Brad Smith discussed AOCs, Embedded Optical Modules (EOM), consumer optical developments, and new products from the OFC show floor. Brad discussed LightPeak & Thunderbolt stating that the price competition with copper interconnects is brutal. Brad noted that a “Quad-pack of four 10G HDMI cables sell for $7.99 retail – this is what consumer optical AOCs suppliers will be facing”. The emerging area of EOMs was discussed with a lot of photos from the show floor and EOMs used in HPCs where optical interconnects are used all the way to the chip level. Brad also discussed the <2Km 100G “FR” debate that is heating up from a new group proposing a 10x10G MSA in opposition to the 4x25G approach to 100G LR4. Brad also shared some excerpts from his just released AOC 2011 Report and stated, “AOCs are beginning to gain traction outside the InfiniBand HPC area in commercial datacenters connecting top-of-rack switches with 40G QSFP. PCI Express optical may become a hot area and the OFC show saw HDMI and USB 3.0 optical products.”

Scott Schube gave a wrap up of interesting announcements from OFC show floor noting new tunable XFP transceiver announcements and 10GEPON-XGPON announcements. Scott stated, “This OFC show was about 25G components and 40G and 100G transceiver and semiconductor announcements”. Scott mentioned that the 25G ecosystem of optical and semiconductor components was coming together with a flurry of new announcements for retimers, CDRs, SerDes and gear box semiconductors from Gennum, National Semi, Avago and Semtech with 25G VCSELs from Avago and Discovery Semiconductors. Finisar demonstrated 25G DFB-based TOSA/ROSAs in an LR4 module and Avago demonstrated a 25G SFP+ SR product. 100G LR4 CFP modules were shown by multiple vendors and Opnext demonstrated a 100G ER4 (40km) module.

OFC Market Watch Panel
LightCounting CEO, Vladimir Kozlov, organized and moderated the OFC market Watch panel “Data Center: Traffic and Technology Drivers” http://www.ofcnfoec.org/Home/Exhibit-Displays-and-Activities/Market-Watch-Panel-Sessions/Panel-IV--Data-Center--Traffic-and-Technology-Driv.aspx

Andy Ingram from Juniper presented some trends from the switching perspective and discussed the four types of datacenters: HPC, enterprise, hosted and cloud – each with its own switching and routing requirements. He noted that the rest of the datacenter systems have advanced but the datacenter network, which is the foundation of it all, has not advanced and is now inhibiting the pace of innovation in the datacenter. New networking architectures and software needs to be developed to remove the bottlenecks.

Jane Li from Huawei-Symantec presented her view of the copper versus optics debate and stated that copper interconnects still rule in most of their datacenters and more optical awareness and training is needed by the industry. She also noted that optics dominates SANs but copper dominates server interconnects at 1G and optical at 10G today.

Scott Kipp, from Brocade said that the industry needs a lower cost solution for 100G interconnects – especially for <2 Km reaches. He stated that a complete 100G link implementation costs over $1 million including two chassis, blades and CFP modules. At a separate 10x10G MSA event, Verizon stated that these were the costs for a 100G Paris to Frankfurt 860 Km link and the same cost to connect 100G from the DWDM Ciena system to the Juniper router only 5 meters apart in the central office! Telecom systems are predominately single-mode fiber oriented. Scott chairs the 10x10G MSA committee effort with Google, JDSU and Santur.

Don Lee from Facebook discussed what large Internet datacenters look like from an interconnect perspective, and stated that large computing switch clusters in Internet data centers are in desperate need of a cost effective 100G transceiver solution that may have a reach of 400-500 meters. Don presented that there are only two 100G transceiver choices: 100 meters using multi-mode fiber or 10Km using single-mode fiber, with nothing in between, and the cost difference is so enormous that SMF is not an option. Reaches typically found in large datacenters are not being addressed in the marketplace nor in standards bodies.

Adam Carter, from Cisco talked about his view of interconnects from the switching/routing business and warned that the tremendous surge of new MSA permutations will be disruptive and costly for the industry. Adam added that optical reach is decreasing with faster data rates using multi-mode optical fiber technologies. At 1 Gbps 1000BASE-SX the reach was 550 meters with multi-mode OM1 fiber but decreased to 300 meters at 10 Gbps with 10GBASE-SR using OM 3. At high-speed 40GE and 100GEBASE-SR the reach decreased further to 150 meters using OM4 fiber. Clearly this builds a case for systems needing very high data rates using single-mode fiber for reaches at and beyond 150 meters. This goes back to the serial/SMF – parallel/MMF ongoing debate that appears to oscillate back and forth at each new technology transition. Using Cat6 copper at 10 Gbps the reach maxed out at 100 meters and 40G and 100G over copper is not even being seriously discussed. At the same time, datacenters are growing larger and larger requiring longer reaches and faster data rates.

Check out the Remodeled LightCounting Website!
We recently upgraded our website. Check back regularly on our “News” tab as this is where we post our LightTrends newsletters and blog for ongoing analysis of industry events, conferences, trade shows and new product announcements. The “Reports” tab lists our current product offering. Soon, we will be enabling clients to purchase and download reports, databases and analysis directly from the site. Check back often as we are preparing a number of new reports that will be soon available for download.

Brad Smith
Sr. VP, Datacom Analyst
Brad@LightCounting.com