Exploding data volumes, particularly from proliferating bandwidth-intensive video along with mobility and the cloud, are driving dramatic bandwidth usage increases worldwide. With carrier networks increasingly upgraded for 100G transmission, and with Ethernet the predominant interface of choice, ultra-high-bandwidth (UHB) Ethernet services, 40GE and particularly 100GE services are rapidly growing, though they still have relatively modest market presences.

100GE adoption picked up strongly in the past year, with revenues at least tripling in 2015 in the US and several carriers gaining double-digit stables of customers and developed businesses in or approaching the tens of millions mark, though growth remains constrained by high equipment prices.

The new Heavy Reading report "100/40GE Service Update: Growth Takes Off Though Cost Ratios Lag," examines this booming market that will see US 100GE sales approach $100 million in 2015 and exceed $200 million in 2016 with CAGR for US 100 GE projected at 73% for 2014-18.

However, this dramatic growth is occurring without any major shift in relative service or equipment costs to justify it in relation to the 10GE services (the proverbial "cost ratio") that are already in widespread use. 5:1 to 7:1 are typical service cost ratios between 100GE and 10GE, only very modestly lower than a year ago, with equipment ratios higher than these and both varying widely.

While US-based 100GE customers have more than doubled in the past year to at least several dozen, this remains predominantly an early adopter set of very large, "household-name" customers, mostly including Web 2.0 players, for whom network simplification and operational efficiency seem more crucial as short-term adoption drivers than dramatically lower cost per bit. Since these dominant buyers appear to respond more to simplicity than cost, lower carrier prices don't seem to rapidly bring more sales, which limits incentives for price reduction, keeping prices higher and adoption narrower than it might be. Diffusion of ultra-high bandwidth (UHB) services to a much larger buyer set is still to come.

40GE is a smaller segment and growing much less strongly than 100GE, though it has strength within certain niches, prominently financial firms, for short-haul and in-metro applications, and among early 40GE equipment adopters.

— Steve Koppman, Contributing Analyst, Heavy Reading