Optical Communications Market
Forecast: Tested by an Earthquake, a
Tsunami and a Flood in 2011, the
Industry Is Poised to Navigate Well
Through Macroeconomic Uncertainty in
2012–2015
December 2011
 

Optical Communications Market Forecast – December 2011
Contents
Abstract ...........................................................................................................................................................4
Executive Summary.......................................................................................................................................5
Section 1: Carrier CapEx Overview........................................................................................... ................7
Global service provider revenue and CapEx is on the rise ........... .............. .............. ........................7
Carriers are becoming information brokers ............................... ......... ......... ......... ......... ................... 9
After several years of constrained investment, we are at the start of a new investment cycle .......9
Growth in mobile networks is driving revenue growth and CapEx ..... ......... ......... ...........................10
Voice is taking a backseat to broadband in driving investment decisions and revenue growth ..10
Service providers are moving into cloud computing .............................. ......... ......... ............. 11
Economic growth will put increased pressure on carriers for consolidation ......... ......... . 12
Section 2: Service Provider Highlights ................................................................................. .......13
AT&T....................................................................................................................................................13
China Mobile .....................................................................................................................................14
China Telecom.................................................................................................................................. 14 Comcast...............................................................................................................................................15
Deutsche Telekom ............................................................................ ..............................................15 
France Telecom..................................................................................................................................16
KDDI .....................................................................................................................................................16
NTT ...................................................................................................................................................... 17
Telecom Italia......................................................................................................................................17
Telefonica .......................................................................................................................................... 18
Verizon ................................................................................................................................................18
Vodafone ............................................................................................................................................19
Section 3: Trends in the Global Telecom Equipment Market .................................................. 20
Alcatel-Lucent is forced to reduce cost .........................................................................................21
Ericsson is in the lead again ........................................... ......... ......... . ........................................21 
Huawei is targeting only 10% growth in 2011 ....................... ......... ...........................................22
Nokia Siemens Networks narrows its focus.......................................... ......... ......... ..................22
ZTE moves into top three in global optical networking equipment market share ................23
Section 4: Datacom Equipment Market and Vendor Highlights ..............................................24
Brocade rebounds in SAN and Ethernet ..................... ......... ......... .............................................25 
Cisco refocuses on its core markets.............................. ......... ......... ..........................................25
Dell emphasizes enterprise solutions and services, profitable PCs ..... ......... .....................26
EMC keeps rolling, boosted by midtier sales .................................. ......... ......... ......................26
HP resets expectations.......................................................... ......... ......... ......... ............................27
IBM Executes on its long term growth strategy........................... ......... ......... ............................ 27
Juniper’s new T4000 and QFabric bode well for 2012 ................... ......... ...............................28
Section 5: Market forecast for optical transceivers employed in telecom applications .......29
CWDM and DWDM Transceivers ............................................................................... ......... ........30
Core networks continue to roll out higher speeds ......................... ......... ......... ..................... 30
The 40/100G opportunity is slipping away from module vendors ........... .............................31
Tunable and fixed wavelength XFP modules will dominate 10G DWDM market ...............32
SONET/SDH transceivers. .............................................................................................................33
XFP dominates at 10Gbps, with SFP+ on the horizon ..............................................................34
FTTx Transceivers.............................................................................................................................35
Optical modules for wireless infrastructure ............................................. ......... .......................37
Section 6: Datacom Transceivers ............................................................. ................................ 39
Ethernet Transceivers .......................................................................... ......... ............................40
Datacenter connections drive growth ................................................ ......... .............................40
Rise of SFP+ .............................................................................................. ......................................41
Higher-speed Ethernet moves forward ............................................ ......... ...............................41
The battle of 40GigE and 100GigE ..............................................................................................43
Form factors split ................................................................................ ......... ...............................44
100GBASE-FR?................................................................................................................................45
Copper: Low power 10GBASE-T is gaining momentum .........................................................46
Fibre Channel Transceivers ................................................................... .....................................47
The Age of 8G? ................................................................................ ..............................................47
Ethernet in the storage market (FCoE) ............................................ ......... ...............................48
Optical Interconnects......................................................................................................................48
Forecast changes.......................................................................................................................... 50
Section 7: Forecast Methodology .............................................................................................. 52
Appendix A: Selected financial data ............................................................................................56 
Abstract
The forecast report presents analysis of business and CapEx of the top 12 service providers, as well as trends in networking equipment market and business of leading equipment manufacturers. The report also offers a detailed forecast for optical components and modules, including historical data from 2008 to 2011 and a detailed market forecast through 2015 for optical components and modules used in Ethernet, Fibre Channel,SONET/SDH, CWDM/DWDM, wirelessinfrastructure, FTTx, andhigh- performance computing (HPC) applications. The sales data for 2008 to 2011 account for more than 30 transceiver vendors, including 25 vendors that shared confidential sales data with LightCounting. The market forecast for 2012–2015 is based on LightCounting’s model correlating transceiver sales with network traffic growth and projected subscribers of FTTx systems. LightCounting’s team of analysts is also grateful to many industry experts for critical review of the forecast projections. 4©Copyright 2011 by LightCounting www.LightCounting.com