Metro P-OTS 2.0 Has Arrived
Sterling Perrin, Principal Analyst, Heavy Reading
Metro transport networking will never be the same again. That's the main conclusion to be drawn from the latest edition of Heavy Reading 's metro packet-optical tracker, the findings of which highlight a trend we identified a year ago -- the arrival of the P-OTS 2.0 era.
Packet-optical transport (P-OTS) has always been a nebulous term in the industry, but we've defined P-OTS products as those that combine native packet switching/transport and native TDM switching/transport, with or without DWDM optics, within a single network element.
In early 2013, data from a Heavy Reading survey of network operators pointed to a coming shift in their metro transport requirements, away from the historic emphasis on TDM features and functions and firmly toward packet features and functions, and, where capacity demands warranted it, integrated DWDM optics. We've labeled this shift as "P-OTS 2.0," and it provided a strong catalyst for P-OTS suppliers in 2013. With three quarters of market data gathered, we estimate that global P-OTS system revenue increased 40% in 2013 to reach $1.8 billion. In 2012, P-OTS had a relatively lackluster year of just 21% growth, so the market resurgence has been a welcome trend for suppliers.
Our current thinking is that P-OTS 2.0 has enough momentum to carry the market through 2015, as operators continue to drop legacy Sonet/SDH equipment in favor of packet- and optics-heavy P-OTS gear. We believe that 2014 will the critical cross-over year in which annual P-OTS spend exceeds legacy Sonet/SDH spend for the first time.
However, there is a cautionary tale here for P-OTS suppliers as well. The declining relevance of native TDM that is helping P-OTS today will ultimately prove problematic as traditional Layer 2/3 switch suppliers, some of which may integrate DWDM optics to their products, increasingly compete for transport applications. In a world where all TDM is emulated, what will be the advantage of P-OTS over transport class Layer 2/3 switches?
A battle looms, and we think it's one that heats up from 2016 onward. At that point, P-OTS suppliers will need to have (and articulate) a clear advantage that does not rest on native TDM.
Sterling Perrin, Senior Analyst, Heavy Reading