Tucked into Oclaro's third-quarter 2016 financials was an announcement that it plans to wind down production of its 40G line side products, signaling the end of the use of 40G technology in transport networks.
With 100G rapidly becoming the new standard in transport, the death of 40G was never in doubt; the only question was when. The answer looks as though it might be sometime in 2017.
Oclaro Inc. (Nasdaq: OCLR) had $11.5 million in revenue for 40G transport products in Q3, down $5 million from the prior quarter. The company expects sales to drop by $3 million to $4 million each quarter going forward. Oclaro said demand for 10G product is going to remain stronger than the company had expected, but growth is coming from 100G products.
The company's 100G growth is being driven in part "by more 100G being deployed in packet optical networks, the move to single mode 100G in the data center and the emerging metro market," said Oclaro CEO Greg Dougherty in the company's conference call with analysts. The quote was taken from the transcript provided by Seeking Alpha.
"40G line side (transport) optical modules are 300-pin modules and are now very old designs," Heavy Reading analyst Simon Stanley said. "Most transport systems now have 100G interfaces so I am not surprised that Oclaro [is] stopping production of 40G modules."
here on Light Reading.
To be clear, there is still substantial demand for 40G products in data centers, but "interest in 40G is already dropping off in the data center," Stanley said, noting that QSFP+ 40G interfaces are being replaced by QSFP28 100G interfaces in many implementations.
Data centers don't always need 100G everywhere, but 10G is increasingly insufficient. Some of the interest in 100G, then, is in the lower splits -- 25G and 50G -- that can be ganged to get to 100G. (See Google: Give Us Better Interconnect... Now)
Stanley said 25G is still being developed, but "25G SFP28 interfaces will be replacing 10G SFP+ in data centers and other applications."
The role of 50G is unclear at the moment, Stanley noted. "50G may be limited to specific implementations such as the Microsoft/Inphi 2x50G PAM4 DWDM QSFP28 transceiver announced at OFC. The IEEE has chosen 8x50G PAM4 for 2km and 10km 400GE ports."
— Brian Santo, Senior Editor, Components, T&M, Light Reading