Optical networking enjoyed one of its most stimulating years in a while. Some of the same financial questions linger, and many bubble-era companies are still hanging on, waiting for IPOs or buyouts. But optical networks are entering a period of upgrades and refreshes, which made for an interesting 2010 and should be great fodder for discussion at OFC/NFOEC in March. Here are a few concepts to keep in mind.

1. Dawn of 100G
There are enough questions here to fill a movie trailer. Will deployment ramp strongly in 2011, rather than wait for 2012? Will prices be low enough to allow that (yet high enough for components vendors to make any money)? Will non-coherent 100 Gbit/s get any attention? (Yes, says analyst Andrew Schmitt of Infonetics Research Inc. in an e-mail to Light Reading -- as will "more alternatives for 100G short and intermediate reach interconnect.")

2. Vertical integration
A Light Reading story in March mooted the idea that vertical integration might be taking hold in optical networking, especially when it comes to systems vendors absorbing some of their suppliers' functions. We also published a story with some well-voiced doubts about the idea. But in 100Gbit/s circles, at least, it's looking like the industry is thinking vertically.

3. What Google wants
If only one customer wants a product, even a customer as big as Google (Nasdaq: GOOG), is that enough to sustain a market? We might find out; check out the recent LR-10 discussion on our message board. Google knows it's better to go with a standard, and that's why the company is suggesting cheaper standardized optics. At a time when the optical industry is re-awakening, Google is finding itself set apart from some mainstream efforts, and it's yet to be seen how that might affect standardization plans.

4. What Cisco does
Signs here point to an anticlimactic ending, but the acquisition of CoreOptics and the launch of the CPT packet-optical transport system (P-OTS) have given optical networking another 15 minutes of fame at Cisco Systems Inc. (Nasdaq: CSCO). How much more optical excitement should we expect?

5. Terabit mad science
We already know Ofidium Pty Ltd. is aiming its OFDM technology at a post-100Gbit/s world, and University of California, Santa Barbara (UCSB) is overtly rallying researchers around Terabit transport. Ericsson AB (Nasdaq: ERIC) is turning high-order quadrature amplitude modulation (QAM) into a product while implying that the technology could be a step towards 400 Gbit/s and beyond. The big terabit breakthroughs won't happen in 2011, but it's looking like the technological direction could start taking shape.

6. ROADMs: Less and less
Colorless and directionless ROADMs seem to have cemented their places in network plans. Contentionless and possibly gridless ROADMs should be next.

7. The fate of 40G
Even as 100G talk keeps heating up, sources are saying that the use of multiple 10Gbit/s connections is an attractive transport alternative for a lot of carriers. The market could accommodate both ideas, but that doesn't seem to leave much of a reason for 40Gbit/s transport to live on. Schmitt, by the way, points out that he's been saying this for a while: "I've been pretty vocal that 100G optical transport is going to ramp and supersede 40G in a few years," he writes. "I feel like that was my best call of 2010." Sterling Perrin of Heavy Reading likewise has his doubts for 40 Gbit/s. (See the first link, below.)

8. Packet-optical growth continues
Packet-optical transport systems (P-OTS) stand to gain more market acceptance and more product entries, while also extending into the network core. The market might even start to form a common definition for P-OTS. And while IP-over-DWDM remains an option, even Cisco is ready to provide an alternative to it. (See No. 4.)

9. Tunable XFPs
A hot product category worth watching. "This is the year of commercial success as other suppliers besides JDSU come on line and end customers become comfortable with the technology," Schmitt writes.

10. Any M&A left?
Some of the more obvious targets have been snapped up, particularly CoreOptics and Mintera, both of which have 100Gbit/s relevancy. More are likely to come; Oclaro Inc. (Nasdaq: OCLR) CEO Alain Couder pointed out in a summer interview that venture investors are yearning for exits for the companies that have lingered for years.

The big component-vendor deals may be finished, though. On paper, another round of consolidation might benefit the industry, but it's hard to see what combination of Finisar Corp. (Nasdaq: FNSR), JDSU (Nasdaq: JDSU; Toronto: JDU), Oclaro, and Opnext Inc. (Nasdaq: OPXT) would be easy enough to pull off. "The Superfund site that was the optical components business is cleaned up. That's something I've said for three years now and it is starting to finally show up in public valuations," Schmitt writes.

— Craig Matsumoto, West Coast Editor, Light Reading