Latest Trends in Optical Networking: 100G & Next-Generation ROADMs
Rajan VaradarajanFriday, June 18th, 2010
There has been a renewal of interest in optical networking companies recently with the anticipated shift to 100G technologies poised to happen soon. Various players are positioning themselves for this big industry shift. Along with this interest in all things 100G, there is also an industry evolution from the early generations of ROADM technology (Reconfigurable Optical Add Drop Multiplexer) to newer versions that provide a significantly higher degree of flexibility and reconfigurability.
Reconfigurable Optical Add/Drop Multiplexers (ROADMs) technically refer to a network element that has the capability of adding/dropping selected wavelengths for local traffic as well as redirecting express traffic to other directions in a multi-degree node. The “Reconfigurable” part in ROADM refers to the ability to do this local add/drop as well as the redirection of express wavelengths in a dynamic fashion from a remote network operations center and without manual re-fibers of line cards and with minimal pre-planning to account for uncertain traffic patterns. This reconfigurability is the key to efficient network adaptation to unforeseen demand patterns and customer connects/disconnects without costly service disruptions. The term ROADM, has been used more broadly than just the network element itself and has been used to refer to (a) an optical transport system that incorporates ROADM technology, and (b) optical components and sub-systems (made by companies such as JDSU) that form the building blocks of the ROADM system.
100G networking and associated optical products can be broadly classified into (a) client side, short-reach, standardized, pluggable optical modules that are used to connect short reaches between routers/switches and transport equipment or among switches, and (b) line side models, DWDM interfaces that are proprietary, vendor specific and cover distances of 1,000 - 2,000 km.
Early low-volume shipments of client side interfaces, which are standardized by IEEE, have commenced and the key players for these interfaces are Finisar, Santur and Opnext. The client side models have not yet reached attractive price points compared to 10G modules, hence slow uptake of the models is projected until the cost-volume positive feedback cycle kicks into higher gear. While early parts are sampling this year, rapid market adoption is highly predicated on the cost points of the modules.
On the DWDM line side that covers geographical reaches across regional, long-haul or ultra-long haul distances, there has been a concerted effort by all major optical equipment vendors to introduce 100G capable systems. The advantages of 100G on the line side are very compelling, as it increases the fiber capacity to 8 Tb/s and the preferred technology path using coherent optical transmission provides a number of additional advantages of simpler link design and inherent compensation of some fiber impairments such as chromatic and polarization mode dispersion. The advantages of 100G systems and reasonable price points relative to 10G systems will facilitate line adoption of 100G; it is expected to occur rapidly once systems are available in early to mid 2011. While early versions of 100G line side technology are available now, optimized and field deployable systems are expected in 2011. The major players in this space are Ciena/Nortel, Alcatel-Lucent, Nokia-Siemens, Huawei and Infinera. Each of the vendors has announced slightly varying flavors of the technology and approaches. With the R&D focus on 100G and coherent technology and the commoditization of 10G technology, it appears that 40G technology is being squeezed out in carrier applications (for both line side and client side applications). This was reinforced by Infinera’s recently announced decision to discontinue 40G non-coherent PIC (Photonic Integrated Circuit) and focus resources on 100G coherent technology in a PIC.
Along with the evolution from 10G to 100G discussed above, the other major area of interest in the optical networking space is the emergence and adoption of next-generation ROADMs that provide colorless, directionless and contentionless capabilities. The first generation of ROADMs introduced in 2003-2004 enabled the carriers to add/drop some wavelengths without disrupting other wavelengths. While this provided a huge improvement over the previous method of operation, it still had a number of limitations in terms of a fully automated reconfigurability. Newer optical building blocks and lower costs are enabling the realization of next-generation ROADM architectures which remove these limitations. Directionless ROADMs enable a common bank of transponders to connect to any direction in a multi-degree node. Colorless ROADMs enable a transponder to flexibly connect to any mux/demux port and contentionless ROADMs enable use of the same wavelength in different segments of a network with a common node. The key building blocks for these new levels of reconfigurability is higher port count WSS (Wavelength Selective Switches) and smaller, lower cost WSS switches. These advances are expected to catalyze the ROADM market and continue the high growth trajectory of this sub-segment of the optical component space and continue to benefit ROADM market leaders like JDSU.
Posted in Internet, Networking, Rajan Varadarajan, Technology, Telco | No Comments »
Search for Advertising Dollars
Lloyd WalmsleyTuesday, April 20th, 2010
PGR experts in online advertising report strong growth in 1Q and signs of further improvement in 2Q. While marketers report clear growth in ad budgets, they note that clients continue to show signs of hesitancy with short notice on requests for proposals, heavy reliance on the spot market and a vigilant focus on ROI and metric-driven forms of advertising.
Experts indicate that search advertising is leading the way out of the recession, and Google continues to hold/gain share of search spending. SEMs expressed a positive reception to Yahoo’s new network distribution tool and some shift in budgets away from Yahoo affiliate sights towards Yahoo O&O sites, a clear positive from a margin perspective. That said, no marketers report spending more ad dollars on Yahoo Search in aggregate. Furthermore, many experts postulate Bing will continue to seize search advertising market share and the prevalence of this view could impact how marketers are inclined to allocate search dollars.
In online display advertising, PGR experts report a firming marketplace, higher prices, and increasing interest in tight integration of ad units with premium content sites. Experts are upbeat on the Google display product over the long-term, but there is a mixed reaction at AOL as some experts note continuing unrest among sales representatives, which may reflect the ongoing challenges within the business.
But change is ahead. Increased smartphone penetration and media consumption from industry leaders Quattro (AAPL), AdMob (GOOG) and JumpTap is driving experts to predict increased investments in mobile advertising for the year ahead.
Tags: aapl, GOOG, google online advertising, internet advertising trends, jumptap, mobile advertising market, mobile marketing, online advertising marketplace, online advertising revenue, online marketing trends, quattro, search advertising, search engine marketing, search marketing, yahoo o&o
Posted in Internet, Lloyd Walmsley, Media & Internet | No Comments »
SAP As Expected
Laxmi PoruriMonday, April 12th, 2010
PGR experts report that their System Analysis and Program Development (SAP) has been in line with expectations. Experts are still seeing slow growth in the Enterprise Resource Planning (ERP) sector, but some more bullish European experts believe the recovery of IT spending in Europe will contribute to solid pipeline.
Experts report that HR and CRM modules continue to lose out as cost considerations drive customers toward SAAS players like CRM and ORCL PSFT. Experts also found that flexibility on maintenance pricing is still aggressive. Some resellers think this will help close more deals relative to last year at the expense of margins. Other resellers cite an increase in upgrades and strong demand for ERP Central Component (ECC) 6.0. Overall, most agree that growth for SAP is tied to a slow economic recovery and not product cycle.
Tags: erp crm, erp sap, oracle saas, saas model, saas software, sap crm future, sap ecc, sap ecc 6.0, sap erp, sap erp 6.0, sap service market, sap software, sap system, service sap marketplace, software industry, stock orcl
Posted in Author, Laxmi Poruri, Technology | No Comments »
Mobile Packet Core — Ready to Take off
Rajan VaradarajanWednesday, February 10th, 2010
Renewed interest in packet core networks over the past several months has generated new product announcements from infrastructure equipment vendors and touched off a round of acquisitions in the space as well.
I should say that packet core networks are not new. They’ve been used to backhaul IP data traffic to servers and other nodes on the Internet since the days of 2.5 G/GPRS networks. The central player in the packet core network is the Gateway GPRS support node (GGSN) in GSM/UMTS networks — a powerful router that performs multiple functions including user authentication, traffic forwarding and management, support for thousands of sessions, data records/billing, tunneling across multiple GGSNs, etc.
That said, the packet core network’s new prominence is the result of a phenomenal increase in mobile data applications and traffic driven largely the result of a multitude of all-you-can-eat data plans from carriers. Another significant factor driving demand for packet core routers is WiMAX, which is being adopted at a great rate for fixed and nomadic IP data applications, especially in developing nations. The ASN gateway packet node is the key component of WiMAX’s core and, although not a cellular network substitution or replacement, there is a sizeable overlap in the functionality of the ASN gateway and cellular networks’ packet core nodes.
Looking ahead, as the industry moves through the transition to Long Term Evolution (LTE), often categorized as 4G technology, the packet core needs equipment that not only meets today’s amped-up capability requirements but must accommodate future expansion as well. Interestingly, several packet core node vendors are targeting sales to the LTE core network, also known as the Evolved Packet Core (EPC). Unlike today’s 3G networks, EPC provides an “all-IP” aspect that carries voice traffic over IP.
Girding up for what’s next
Packet core equipment vendors include the traditional mobile infrastructure market leaders, among them Ericsson, Nokia, Siemens, Alcatel-Lucent, Hitachi (which recently acquired Nortel), Huawei and ZTE. But smaller startup companies are also making their presence known. For example, WiChorus saw initial success in the WiMAX space and enhanced its product line with offerings for the LTE Market. Tellabs recently acquired WiChorus and will integrate its product into the highly successful 8800 Multiservice Router.
Cisco also acquired a small startup, Starent, in response to its recent success with Verizon. Starent’s ST-series Multimedia Core Platforms connect to multiple types of access networks, including UMTS, WiMAX and LTE EPC. The core software runs StarOS, a variant on Linux, and the platforms incorporate hot swap capability, redundancy, and a variety of other carrier class features. Unlike the larger vendors, Starent and WiChorus offer software systems that are easier to scale for various uses and capacities. Their core products are purpose built and designed from the ground up.
A number of equipment vendors, including Hitachi, NEC, NSN and ZTE, offer modified Advanced Telecommunications Computing Architecture (ATCA) platforms as the basis for their packet core nodes. These “Big Iron” packet core nodes have a multi slot chassis populated with high capacity cards and often have network processors/ASICs/switching devices. The network processors/ASICs are useful for deep packet inspection (DPI) that, allows the node to shape/police/report traffic based on embedded content although no operator will publicly admit it. Companies such as Ericsson and Starent rely on custom-built platforms to address this market.
Ready and not
It will be interesting to see Juniper’s roadmap for the packet core network as it is fleshed out over the next few months. Juniper was supposed to partner with Starent, but instead was acquired by Cisco. Juniper also partnered with Ericsson for the 3G packet core (GGSN), but won’t be involved on 4G equipment. And Ericsson’s 2006 acquisition of Redback appears prescient as it provides credibility for the company’s IP technology with the service provider network.
Some reports have Alcatel-Lucent addressing the packet core by adding functions to the 7750 service router platform, which they gained in the TiMetra acquisition and saw significant success with in the metro Ethernet space. This also has high credibility with service providers.
Lastly, Huawei’s success in Europe and Asia does not make it a major player in the North American market. Observers indicate Huawei’s presence depressed bids and profits of European manufacturers of next generation packet cores.
Tags: Alcatel-Lucent, Ericsson, Hitachi, Huawei, Juniper, NEC, Nokia, Nortel, Siemens, Starent, WiChorus, WiMAX, ZTE
Posted in Author, Networking, Rajan Varadarajan, Telco | No Comments »
Convergence in the Data Center’s Future
Unni NarayananTuesday, February 2nd, 2010
We are at the forefront of an exciting period for data center design and innovation driven by what is occurring in three separate-but-fast-converging market segments: co-location businesses, managed services vendors and cloud providers.
Our view today is that the future, and fortunes, of each segment is inextricably linked and that the relationship of key conditions in each segment — capacity for co-lo, profit margin for managed services and technology innovation for cloud providers — will meaningfully define the opportunities, challenges and performance of what we see as a truly amalgamated marketplace in the next 10 years. Briefly, here is what PGR’s network is reporting:
Capacity — Enterprises suffer a data center capacity shortage brought on by a dearth of viable real estate, a state of affairs that PGR’s network consistently characterizes as fundamental rather than temporary. The capacity squeeze is made worse by growing demand from SMBs among others that want to get out of the data center business with its acute heat/power problems.
Margin — Right now, SMBs and enterprises are willing to pay a premium for the value added by managed services providers. We believe this will result in continued high margins for managed services providers over the foreseeable future.
Technology innovation — While it is clear that elements like SAAS are accelerating, all of the technologies related to bill-back, security and private clouds and back-end support for performance enhancement among others are immature. A lot of heads are “in the clouds” right now and speculation about what is coming and what will occur as a result is intense.
Looking at the three segment reports above, it is clear that developments and conditions in one segment weigh strongly on the others. Thus, factors that impact co-location vendors inevitably affect the prices enterprises are willing to pay managed services providers and create opportunities for cloud providers to innovate to solve IT challenges.
More to come.
Tags: Co-location, Enterprise computing, managed services, SAAS, SMBs
Posted in Cloud Computing, Data Center, Unni Narayanan | No Comments »
You Heard It Here First: BRCD a Winner in 2010
Unni NarayananTuesday, January 26th, 2010
Any number of pundits will tell you BRCD is on the ropes, hanging by a fingernail, ready to succumb to a combination of 1.) flat growth rates in FC and, consequently, no TAM to fuel BRCD’s expansion in the data center; 2.) technology obsolescence at the hands of FCoE and big price and margin erosion in core storage products due to insufficient differentiation; then 3.) a plunge into the really deep end with the Foundry acquisition, which the punditry avers will destroy BRCD’s very foundation.
Sounds pretty bad. But wait! Our checks show BRCD is far from rolling over, taking it on the chin or moving to the Jersey Shore. In fact, PGR’s network accentuates the positive noting BRCD style and panache that should stand it very well this year. Check it out:
FC demand is robust because of refreshes and green-field opportunities. If someone counted the total number of FC cable, HBAS and switches in 2010 vs. 2009, they might not see a big difference but it seems no one is counting the huge “rip and replace” opportunity in the ongoing storage and data center consolidation build out.
There is a huge co-location capacity squeeze. New co-lo space is expected to come on line throughout 2010. And, although SANs by and large do not saturate BRCD 8Gb/sec Director class switches, it is only an INCREMENTAL cost to refresh the SAN with high-performance products as part of an upgrade in the co-los. Furthermore, BRCD is well positioned to handle FCoE when it becomes real. That and CSCO has stopped attempting to “buy accounts” with the largely unimpressive Andiamo legacy products. Hence, we do not expect accelerating product erosion.
Everyone likes to say that if BRCD could “do it over again,” they would have given the Foundry acquisition a second thought. However, the reality is that BRCD controls its own destiny if it can manage the integration of the Foundry products well. In that scenario, it is quite possible for BRCD to “pick off” some incremental share from the likes of JNPR. And, with sufficient effort, they can move up in the networking hierarchy. HPQ’s acquisition of COMS is the end of any possible merger with BRCD because the war in the data center between CSCO and HPQ will center around the winner of the storage battle. All that and BRCD is a free agent that can join either side.
Not so bad after all, we say.
Tags: BRCD, Brocade, CSCO, FCoE, Foundry, HPQ
Posted in Data Center, Networking, Unni Narayanan | No Comments »
Calix: Positioned Well Enough on the Road to IPTV?
Rajan VaradarajanMonday, January 4th, 2010
Calix, a strong player in the growing wireline access (GPON/DSL/IPTV pipes) segment has a singular focus on Tier-2/Tier-3 markets, which in the near-term bodes quite well as the Tier-2/3 segment is in line to receive most of the funds made available through the federal government’s Broadband Stimulus Program to build out the nation’s broadband network, part of the multi-billion-dollar American Recovery & Reinvestment Act’s (ARRP). Tier-1 companies largely passed on Broadband Stimulus.
Calix focuses on wireline access solutions of all types: DSL, GPON and ActiveEthernet. The company’s systems allow service providers to go beyond mere connectivity and reach for the brass ring of extended communications services and revenues that is driving the transformation from legacy circuit to packet; from narrowband to broadband; and from copper to fiber networks.
Wireline is the true grail. Industry headlines may all be about next-generation wireless but wireline access deployment is the key to the reliable, cost-effective, very-high-speed pipes that are the foundation for Telcos’ entry to the IPTV space.
Calix provides the entire solution ecosystem for the wireline systems. Though it started as a DSL/next-gen voice company called Broadband Loop Carrier, Calix added GPON capabilities through the acquisition of Optical Solutions Inc., and carried out a technology refresh to evolve its product portfolio from ATM to IP/Ethernet. There’s a lot to like: Calix enjoys a strong market position and is the market leader in the Tier-2 segment with good customer traction. The company has a strong, comprehensive product portfolio that is well positioned to address all wireline access market needs. As noted they are a beneficiary of Stimulus funds over the next 12-18 months and Calix is aggressively addressing growth markets such as IPTV and GPON.
But Calix also has significant challenges. The company has not succeeded in expanding into Tier-1 or international accounts where strong, well-established players maintain deep, long-standing relationships with their customers. As a result, its upside potential is limited because once ARRP infrastructure funds to Tier-2/3 carriers are deployed, Calix has little opportunity to grow at a rate higher than the organic growth of the Tier-2/3 segment in the U.S. Add to that concern over the long-term competitiveness and operational viability of many Tier 2 & 3 carriers, Stimulus funds notwithstanding, and the wireline access market is fiercely competitive with margins under 30% and relatively high R&D costs.
Overall, this is a growth market characterized by a few technology shifts. Verizon’s bold FTTP initiative has spurred a deep-fiber build out by many other carriers, enabled to a much greater degree by the ARRA Broadband Stimulus program. Calix stands to gain significantly from this build out as it has focused on Tier-2 and Independent Operating Companies (IOCs)/Rurals, again, those that are in line to receive the bulk of the funds.
The next-gen wireline access market is segmented by types of customers, and different players have strengths in different segments. Also, with almost no international presence, Calix is viable only in North America. Still, Calix’s focus on the Tier-2/Tier-3 market of North American wireline carriers brings a long customer list to bear that includes CenturyLink, Windstream, TDS Telecom and many other smaller companies.
Looking at the competitive landscape, the Tier One customers (AT&T, Verizon, Qwest) are largely the domain of Alcatel-Lucent, Motorola, Adtran and Ericsson. The Tier-2 customers (CenturyLink, Windstream, Frontier etc.) are serviced by Calix and Adtran and Tier-3 customers (IOCs/ Rurals, etc) see Calix, Enablence and Occam.
Tags: ActiveEthernet, AT&T, Calix, CenturyLink, DSL, Frontier, GPON, Qwest, Verizon, Windstream
Posted in Author, Rajan Varadarajan, Telco | No Comments »
Semiconductor Distribution Book-to-Bill Trends Still Look Good
pgresearchTuesday, December 1st, 2009
Some IC manufacturers view semiconductor distributors as the ugly red-headed step child who slaves away, building up inventory and fulfilling orders. When the electronics industry is hot and fabs are at full capacity distributors can get the short end of the stick as IC companies decide to support high volume and key customers instead of the distributors. In the past, when business was slow, IC companies tried to put inventory in the channel in order to move product. By understanding what’s going on with distributors we can get a general sense of demand at IC manufacturers. So the question is what are some metrics or leading indicators to look for when trying to understand if distribution business will be getting better or worse? There are many numbers that people look at like bookings, billings, book-to-bill, lead times, days of inventory pricing, etc…One metric that continues to trend well is book-to-bill ratio; it’s a ratio of bookings within a time period (usually a month or quarter) and billings within the same period. In a slow economy we generally want to see a book-to-bill >1, which usually means that business is picking up. Over the last few months book-to-bill has been >1; partly due to longer lead times which cause customers to place orders. Looking forward things still remain positive in the short term but there is uncertainty in the air and our PGR network remains cautious about the future.
Posted in Bob Nguyen, Semiconductor | No Comments »
BRCD Survey: Switches and HBAs? Selling to both sides…
Unni NarayananThursday, October 29th, 2009
It is PGR’s view that BRCD has solidified its hold on the FC switch market and is maintaining solid margins in a macro environment favorable to Greenfield storage deployments. Additionally, our network continues to report BRCD is picking up HBA share but the question remains: at who’s expense?
For different reasons, our network is positive on BRCD. Here’s a summary:
1.) All agree BRCD is really the only game in town in core switching products and margins are robust;
2.) But the value of BRCD’s solid market position is offset somewhat by questions about the fundamental viability of the Fibre Channel market itself. Many of our experts see lackluster growth over the next year, the result of better traction in FCoE;
3.) Right now, our network does not think BRCD poses an immediate threat to QLGC or ELX in HBA but their position gives customers a look at how BRCD can work both sides of the equation. The question remains whether BRCD can get enough out of HBA to drive switch sales. The jury’s still out on that.
Clearly, storage is a key battlefield in the war for the data center. And no clear victor can emerge from the likes of CSCO, HPQ or IBM until a major player focuses on the idiosyncrasies of areas such as SAN switching. So, in the meantime, BRCD is secure in its role as a profiteer selling to both sides.
Tags: BRCD, CSCO, ELX, FCoE, HPQ, IBM, QLGC
Posted in Data Center, Storage, Unni Narayanan | No Comments »
