The global OC market posted revenues of $6.8bn in 2013, up 3% from the 2012 level. The gain was due to strong datacom sales driven by hyperscale data centers, 100G coherent demand, and unexpected growth in sales of transceivers for fibre-to-the-antenna applications for 4G build-outs, says Ovum.
In Q1 OC sales posted a 1% decline sequentially but grew 7% compared to the year-ago period.
The lower 1Q14 result is due to new lower telecom prices being implemented. Demand for 100G components for coherent transmission in WAN, datacom transceivers at 10 and 40G, and fibre-to-the-antenna transceivers is expected to continue.
Traffic continues to increase, and high-speed optics being used in new applications are helping to drive the market forward.
The WAN OC segment, which includes components in telecom carriers' core and metro networks, continues to be the largest segment and is forecasted to grow at a compound annual growth rate (CAGR) of 11% to $7bn in 2019.
Demand for 100G components and modules is a big driver for growth in WAN. Ovum expects strong demand for pluggable coherent transceivers in 2015.
ROADMs and amplifiers posted a weak 2013, and Ovum expects this weakness to continue in 2024 but believes that the market will start to ship the colourless, directionless and contentionless ROADMs with flexible grid in 2015 and grow from there.
Ovum expects growth from sales of Raman amplifiers, particularly at the end of the forecast period, to support longer-distance transmission for data rates beyond 100G.
Datacom will be the fastest-growing segment, expanding at a 16% CAGR to reach $4.2bn in 2019. The market is led by demand for 10 and 40G components in the early years and then 100G in the later years driven by the availability of server ports supporting data rates greater than 10G.
Access is forecasted to decline at a 2% CAGR to $1.1bn in 2019. Access includes CATV, FTTx and transceivers for the fibre-to-the-antenna application.
The decline will be driven by the FTTx application, where volumes are nearly constant through the forecast period but price declines are projected to pull down revenues.
"Vendors have good reason to be optimistic about 2014 and beyond," says Ovum's Daryl Inniss, "Ovum believes demand for 100G metro–optimised transmission gear will begin shipments and ramp in 2015. Multiple component vendors introduced components and pluggable optics for 100G DWDM in anticipation.
Opportunities are also emerging in the data centre for high-speed interconnects. Although the market posted a low-single-digit sequential decline in 1Q14, partly due to annual telecom price declines that take effect in the first quarter of the year, it expanded compared to the year-ago period.
Ovum expects the OC market to expand 8% in 2014, in part to support continuing annual double-digit traffic growth and the infrastructure needed for cloud services."