The market for packet-optical switch infrastructure is growing rapidly, propelled by the continued rapid uptake of 100G in long-haul networks.
This is the main finding in the latest edition of Heavy Reading 's Next-Gen Core Packet-Optical Market Tracker. The overall, global, long-haul (or core) transport network experienced solid growth, at 7.6% in 2013, also driven by 100G network build-outs. That overall core transport network market includes the packet-optical switching segment, which Heavy Reading defines as products that integrate DWDM transport and OTN switching and, ultimately, packet switching as well.
As operators deploy 100G, they are increasingly looking to integrate their 100G transport networks with switched OTN for a number of reasons, including the ability to groom lower-speed 10G traffic efficiently into the larger 100G pipes. We have written about the drivers for switched OTN in the core extensively in the past, and the results of this migration are now being seen concretely in the market numbers. Global core packet-optical switching revenue jumped 65% in 2013 to reach $1.3 billion (a total that includes both the switching and the transport portions of these products).
In contrast, revenues generated from legacy Sonet/SDH-based optical crossconnect products continues to plummet, falling by 22% in 2013 to just $200 million.
At this point, the numbers show us some clear trends:
- 100G is driving core network spending growth and operators' core network architectural decision processes.
- OTN is the clear switching choice for operators' core networks today. We believe this will remain the case over the next five years as well.
- Operators want to combine their switched OTN with their transport platforms together, and we believe this will also remain the case over the next five years.
In addition to DWDM transport and OTN switching, Heavy Reading’s definition of packet-optical switching also includes a component for packet switching products, such as Ethernet, MPLS-TP, or MPLS switching. The evolution of packet switching in core transport is less clear at this time, and it's something Heavy Reading will be keeping a close eye on moving forward. Early on, it seemed as if some form of packet switching would be a major component of core transport. As one example, Verizon Communications Inc. (NYSE: VZ) was originally a big proponent of integrated packet switching and core transport, but ultimately the carrier made separate decisions for its MPLS core, with Juniper Networks Inc. (NYSE: JNPR), and 100G/OTN with Ciena Corp. (NYSE: CIEN)
At OFC in March, we heard rumblings from some camps that the switched OTN core would be short-lived and that MPLS switching would soon step in as the replacement. If the definition of "soon" is the next three years, we don't see how this transition will happen.
We believe the momentum of switched OTN is too great. However, if we are looking at the five-year horizon, and beyond, it's certainly a possibility (but not a given). The big routing suppliers are making their case to operators now, and we'll be polling the service provider market to see if and when these operators start listening.
— Sterling Perrin, Senior Analyst, Heavy Reading