CIR Scopes 10-Gig Prospects

Average annual growth rate for the 10-Gbps sector will be around 16 percent for the 2004 to 2008 period. This is a considerable improvement on the 8 percent expected for the 2002-to-2004 period.

Components and technology innovations are now the primary source of cost, performance and functionality advantage for 10-Gbps equipment vendors. These are most likely to stem from improved packaging, better power consumption and thermal control, as well as enhanced manufacturing processes.

Components manufacturers that can demonstrate how their products will enable 10-Gbps networks to have clear cost advantages over networks based on multiple lower-rate lines will quickly gain better margins and market share. Networking technologies have not usually taken off until they demonstrate about ten times the performance of the next lowest speed technology for about one-third the cost. 10-Gbps technologies have not yet achieved this. Component manufacturers making this kind of leap forward will attract considerable profits to themselves.

Integration can be a differentiating feature and help hold down costs, but they must be oriented towards market needs. With integrated modules there is a danger that the customer will incorporate the same functionality twice and actually force up costs. Also, customers have not usually bought processors and (say) framers/mappers from the same company, so where processing power is integrated into transmission electronics, component selection becomes a much bigger decision for the customer, complicating the marketing and sales process for the chipmaker.

By 2008, WDM-related optics and electronics will represent almost two- thirds of the 10-Gbps market. This is due to the fact that WDM systems are more likely to operate at 10 Gbps than SONET/SDH or Ethernet systems and that some of the optics for WDM systems remain quite expensive.