The Market for Optical Network Components

Publication Date	February 2007
Publisher	BCC Research
Product Type	Report
Pages	212
ISBN Number	not applicable
Product Code	BCC00005

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Summary

The Information Age has clearly arrived. Increasingly, businesses and consumers communicate in real time. No longer are there any delays when individuals need to pick up messages at home or the office. Information travels quickly from the source to multiple destinations, whether it is a living room, a branch office, an automobile, or a combat unit in the Middle East. Networks have made it possible for companies and individuals to communicate so effectively. They have become faster, less expensive, and simpler to deploy. Businesses and individuals have developed new applications to take advantage of high-speed, multimedia-friendly transmissions. Not only are users able to speak to one another in real time, but they are also able to instantly exchange information from simple items like a weather report or a sports score to complex files and images. Equipment vendors are integrating networking components into a wide range of products. They have branched out from PCs and now include them in IP phones, PDAs (personal digital assistants), and laptop computers. These benefits are starting to be enhanced so that inanimate objects like a soft drink machine or a station on an assembly line can communicate in real time as well. In sum, just about every type of device is being connected to business and consumer networks.

Behind these new networking advances is an ever expanding array of semiconductors. Advances in wafer and silicon technology have enabled chip manufacturers to squeeze complex functions onto smaller and smaller spaces. They have also been able to put more and more functionality into these chips. As a result, network chips continue to be an area of prime interest for semiconductor suppliers. Because these new semiconductors offer users a number of benefits-more functionality, simpler deployment, and support for higher speeds-demand for them from network equipment suppliers has been rising.

This report will examine the silicon used to connect an ever growing array of devices, from complex servers to next-generation phones, to telecommunications networks. After defining the different market factors (the impact of wireless networking, the growth of the Internet, the use of Network Processing Units (NPUs), the importance of Multiprotocol Label Switching (MPLS), and the significance of future network growth), the report analyzes and forecasts market trends in each segment of the optical semiconductor market, delineates technology trends, and identifies market leaders. Long-term economic, business, and other macro issues raised by these trends are also analyzed.

The report outlines immediate and long-term commercial opportunities for vendors interested in delivering network semiconductors. Key product segments covered include spending on NPU, System on a Chip (SOC), backplane, and transceivers at a variety of speeds from 52M bps to 10G gigabits per second. In addition, the report examines the factors fueling the growing opportunity in these market segments and features a comprehensive look at emerging developments that may impact the optical network component market.

The text includes crisp explanations of the various technologies used in optical networks, easy-to-follow discussions about the level of maturity of the different technologies, and descriptions of the steps that need to be taken so that use of these products and their associated services can become more common. By incorporating data about past purchases, examining new user requirements, and including the perspectives of key industry insiders, sales forecasts and projections are made through the year 2011. The projections include the number of individuals using the services, revenues generated by them, and anticipated growth rates for products supporting a variety of transmission speeds.

Scope Of Study

The scope of this report is broad, and contains:

An overview of the global optical network components market, with historic and emerging business usage trends, market demographics, government regulatory issues, and expenditures for technology, products, and applications
Detailed market forecasts for various applications, including NPU optical network components, SOC optical network components, transceiver network components, and backplane network components, with compound annual growth rates and five-year projections through 2011
An important technology review that discusses critical developments and potential trends in the upcoming market, as well as a detailed analysis of patents over the past few decades
Company profiles and detailed background information for all the major players in the industry

Report Highlights

The total global market for optical network processing unit purchases was worth more than $2.1 billion in 2005 and over $2.2 billion in 2006. At a compound annual growth rate (CAGR) of 3.5%, this market will reach almost $2.7 billion by 2011. NPU optical network components have the greatest growth potential through the forecast period. In 2006 these component purchases totaled $355 million and at a CAGR of 5.4% will grow to $461 million by 2011. Backplane optical network component purchases held the highest share of the market through the forecast period. In 2006 these purchases totaled $952 million; over 42% of the market. By 2011 the value will grow to more than $1.1 billion, maintaining its 42% market share.

Content

Introduction
- Study Goals And Objectives
- Reasons For Doing The Study
- Contributions Of The Study
- Scope And Format
- Methodology And Information Sources
- Analyst Credentials
- Related BCC Reports
- BCC Online Services
- Disclaimer
Executive Summary
- Summary Table: Worldwide Optical Market Segment Revenues, Through 2011 ($ Millions)
- Summary Figure: Worldwide Optical Market Segment Revenues, 2004-2011 ($ Millions)
Overview
- Businesses Embrace Networking Functions
- Consumers Adopt High Bandwidth Applications
- Digital Home Media
  - Local Area Networks
  - Ethernet
  - Untethered Networking
  - Web At Home
  - Challenges At Home
- Wireless Lan Takes Off
- Wlan Options Continue To Grow
- Move To 100m Wlan Standard Hits A Snag
- Enterprises Large And Small Embrace Wlans
  - Interoffice Connectivity
  - Reduced It Costs
  - Contingency Planning
- Hot Spots Catch Fire
  - Municipal Wi-Fi Hot Spot Networks Take Hold
  - Wi-Fi Hot Spot Usage Spreads
- The End-User Influx
- The Global Reach Of Telecommunications Services
  - The Internet's Impact On Network Traffic
  - Internet Use Is Limited To Specific Areas
  - Wireless Networks Start To Boom
- The Impact On Telecom Networks
- How Carriers Can Meet Rising Traffic Demands With Next-Generation Network Infrastructures
- THE MOVE TO OPTICAL NETWORKS
- Requirements For Optical Equipment
- Wdm In The Wan
  - Optical Cross-Connects
  - Protection Switching
  - Optical Add/Drop Multiplexing
  - Optical Signal Monitoring
  - Network Provisioning
  - Optical Switch Fabrics
    - Optomechanical Switches
    - Microelectromechanical System Devices
    - Electrooptic Switches
    - Thermooptic Switches
    - Liquid-Crystal Switches
    - Bubble Switches
    - Acoustooptic Switches
    - Semiconductor Optical Amplifier Switches
  - Optical Packet Switching
  - Issues Concerning Optical Packet Switching
  - Contention Resolution
    - Buffering
    - Deflection Routing
    - Wavelength Conversion
  - Packet Switch Architectures
    - General
    - Shared Wavelength Converters
    - Limited-Range Wavelength Converters
    - Keops (Keys To Optical Packet Switching)
    - The Data-Vortex Packet Switch
  - Generalized Multiprotocol Label Switching
  - How Multiprotocol Label Switching Works
  - Generalized Multiprotocol Label Switching
  - Automatically Switched Optical Network
  - Optical Burst Switching
  - Network And Node Architecture
  - Burst Generation
  - Channel Scheduling
  - Qos Support
  - Contention Resolution
  - Terabit Burst Switching
- The Next Step In Optical Networking
- Optical Data Connections Broken Down
- Itu History
- Itu Develops Optical Network Standards
  - The Movement To Sonet
    - Sonet Speeds
    - Asynchronous Transfer Mode
    - Atm Concepts
  - Why Virtual Circuits?
  - Types Of Virtual Circuits And Paths
  - Successes And Failures Of Atm Technology
- Dense Wavelength Division Multiplexing
- The Rise Of Hybrid Cwdm/Dwdm Networking
- The Emergence Of 10 Gigabit Ethernet
- Networking Components
Changing Chip Design
- The Emergence Of Npus
  - New Architecture Maximizes Performance, Minimizes Deployment Time
  - Selecting Networking Processing Silicon
- Npu Versus Asics
  - Partitioning
  - Remember Memory
  - One Plus One Does Not Equal Two
  - Applications For Npus
  - NPU In A Core Router
  - NPU In A Multi-Service Edge Switch
  - NPU In An Ethernet Aggregation System
  - NPU Revenue Ramps Up
  - NPU Interest Shifts To 10G Transmission Rate
- OC-1 NPUs
  - Agere
  - Amcc
  - Hifn
  - Intel
  - Pmc
- OC-3 NPUs
  - Agere
  - Hifn
  - Intel
  - Mindstream
  - Pmc
- OC-12 NPUs
  - Amcc
  - Bay Microsystems
  - Ezchip
  - Infineon
  - Pmc
- OC-48 NPUs
  - Amcc
  - Bay Microsystems
  - Intel
  - Pmc
  - Xcelerated
- OC-192 NPUS
  - Amcc
  - Bay Chesapeake
  - Ezchip
  - Pmc-Sierra
  - Xcelerated
System-On-Chip Design Starts To Take Hold
- System-On-Chip Design Starts To Take Hold
  - Soc It To Me
  - Programmable Logic Devices
  - Additional Solutions
  - Software Functions
- OC-1 SOCs
  - Agere
  - Broadcom
  - Freescale
  - Marvell
  - Texas Instruments
- OC-3 SOCs
  - Agere
  - Broadcom
  - Freescale
  - Marvell
  - Texas Instruments
- OC-12 SOCs
  - Broadcom
  - Centillion
  - Freescale
  - Marvell
  - Texas Instruments
- OC-48 SOCs
  - Broadcom
  - Freescale
  - Mysticom
  - Pmc
  - Texas Instruments
- OC-192 SOCs
  - Broadcom
  - Centillion
  - Freescale
  - Pmc-Sierra
  - Texas Instruments
Transceivers
- OC-1 Transceivers
  - Agere
  - Broadcom
  - Centillium
  - Infineon
  - Marvell
- OC-3 Transceivers
  - Agere
  - Broadcom
  - Centillium
  - Infineon
  - Texas Instruments
- OC-12 Transceivers
  - Agere
  - Broadcom
  - Centillium
  - Infineon
  - Texas Instruments
- OC-48 Transceivers
  - Agere
  - Centillium
  - Infineon
  - Marvell
  - Texas Instruments
- OC-192 Transceivers
  - Broadcom
  - Centillion
  - Marvel
  - Infineon
  - Texas Instruments
Backplane
- Backplane
- Atca
- Migrating To Advanced Telecom Computing Architecture
  - The Need For Speed
  - Compliance
  - More Standards Work To Come
- OC-1 Backplane
  - Agere
  - Amcc
  - Infineon
  - Texas Instruments
  - Vitesse
- OC-3 Backplane
  - Agere
  - Amcc
  - Broadcom
  - Infineon
  - Texas Instruments
- OC-12 Backplane
  - Agere
  - Amcc
  - Freescale
  - Infineon
  - Texas Instruments
- OC-48 Backplane
  - Agere
  - Amcc
  - Freescale
  - Infineon
  - Texas Instruments
  - Vitesse
- OC-192 Backplane
  - Agere
  - Amcc
  - Freescale
  - Infineon
  - Texas Instruments
What's Next?
- Mems Technology Advances
  - MEMS In A 3-D Configuration
  - MEMS In A 3-D Configuration
- Optical Chip-To-Chip Connections Advance
- Movement To Higher Speed Networks
  - High-Capacity Repeater Technology
- Nanoelectronics Emerge
  - Moving Away From Discrete Devices
  - Nanostructure-Based Platform Architecture
  - Nanoimprint Lithography
  - Challenges In Nanotechnology
  - The Advantages Of Nanoimprints
- Optical Wireless Looms On Horizon
  - Placement Of Wireless Optical Lines
  - Wireless Optical Advantages
Appendix - List Of Abbreviations
- Appendix - List Of Abbreviations
- Appendix - List Of Abbreviations
- Appendix - List Of Abbreviations
- Appendix - List Of Abbreviations
List Of Tables
- Summary Table: Worldwide Optical Market Segment Revenues, Through 2011 ($ Millions)
- Table 1 Typical End User Data Transmission Through 2011 (Kilobits Per Second)
- Table 2 Per Port Wlan Pricing Trends, Through 2011 ($)
- Table 3 Number Of U.S. Cities Deploying Municipal Wi-Fi Networks, Through 2011
- Table 4 Worldwide Deployments Of Wi-Fi Hot Spots, Through 2011
- Table 5 Number Of Internet Users Worldwide, 1995 To June 2006 (Numbers In Millions)
- Table 6 U.S. Internet Backbone Traffic Patterns, 1990-2005 (Tb/Month)
- Table 7 Internet Usage Statistics By World Region, 2005
- Table 8 Cellular Network Subscriber Growth, Through 2011 (Millions)
- Table 9 Top Ten Wireless Carriers By Number Of Subscribers, 2005 (Millions)
- Table 10 Mpls Usage By Percentage Of Telecom Traffic, Through 2011 (%)
- Table 11 Sonet/Sdh Data Rates And Line Speeds
- Table 12 Worldwide Optical Network Processing Revenues, Through 2011 ($ Million)
- Table 13 Worldwide Optical Network Processing Revenues By Type, Through 2011 ($ Million)
- Table 14 Worldwide Npu Pricing Trends By Unit, Through 2011 ($)
- Table 15 Worldwide Optical OC-1 Network Processing Unit Revenues, Through 2011 ($ Millions)
- Table 16 Worldwide Optical OC-3 Network Processing Unit Revenues, Through 2011 ($ Millions)
- Table 17 Worldwide Optical OC-12 Network Processing Unit Revenues, Through 2011 ($ Millions)
- Table 18 Worldwide Optical OC-48 Network Processing Unit Revenues, Through 2011 ($ Millions)
- Table 19 Worldwide Optical OC-192 Network Processing Unit Revenues, Through 2011 ($ Millions)
- Table 20 Worldwide Optical System-On-Chip Revenues, Through 2011 ($ Millions)
- Table 21 Worldwide Optical System-On-Chip Revenues By Type Of Unit, Though 2011 ($ Millions)
- Table 22 Worldwide Soc Pricing Trends By Unit, Through 2011 ($)
- Table 23 Worldwide Optical OC-1 System-On-Chip Revenues, (Through 2011 ($ Millions)
- Table 24 Worldwide Optical OC-3 System-On-Chip Revenues, Through 2011 ($ Millions)
- Table 25 Worldwide Optical OC-12 System-On-Chip Revenues, Through 2011 ($ Millions)
- Table 26 Worldwide Optical OC-48 System-On-Chip Revenues, Through 2011 ($ Millions)
- Table 27 Worldwide Optical C-192 System-On-Chip Revenues, Through 2011 ($ Millions)
- Table 28 Worldwide Optical Transceiver Revenues, Through 2011 ($ Millions)
- Table 29 Worldwide Optical Transceiver Revenues, Through 2011 ($ Millions)
- Table 30 Worldwide Transceiver Pricing Trends By Unit, Through 2011 ($)
- Table 31 Worldwide OC-1 Optical Transceiver Revenue, Through 2011 ($ Millions)
- Table 32 Worldwide Optical OC-3 Transceiver Revenues, Through 2011 ($ Millions)
- Table 33 Worldwide Optical OC-12 Transceiver Revenues, Through 2011 ($ Millions)
- Table 34 Worldwide Optical OC-48 Transceiver Revenues, Through 2011 ($ Millions)
- Table 35 Worldwide Optical OC-192 Transceiver Revenues, Through 2011 ($ Millions)
- Table 36 Worldwide Optical Backplane Revenues, Through 2011 ($ Millions)
- Table 37 Worldwide Optical Backplane Revenues By Unit, Through 2011 ($ Millions)
- Table 38 Worldwide Backplane Pricing Trends By Unit, Through 2011 ($)
- Table 39 Worldwide OC-1 Backplane Revenues, Through 2011 ($ Millions)
- Table 40 Worldwide Optical OC-3 Backplane Revenues, Through 2011 ($ Millions)
- Table 41 Worldwide Optical OC-12 Backplane Revenues, Through 2011 ($ Millions)
- Table 42 Worldwide Optical OC-48 Backplane Revenues, Through 2011 ($ Millions)
- Table 43 Worldwide Optical OC-192 Backplane Revenues, Through 2011 ($ Millions)
List Of Figures
- Summary Figure: Worldwide Optical Market Segment Revenues, 2004-2011 ($ Millions)
- Figure 1 Typical End User Data Transmission, 2004-2011 (Kilobits Per Second)
- Figure 2 Ethernet Usage By Application, 2005 (%)
- Figure 3 Per Port Wlan Pricing Trends, 2004-2011 ($)
- Figure 4 Share Of The Most Popular Wireless Wan Network Standards, 2005 (%)
- Figure 5 Number Of U.S. Cities Deploying Municipal Wi-Fi Networks, 2004-2011
- Figure 6 Worldwide Deployments Of Wi-Fi Hot Spots, 2004-2011
- Figure 7 Wireless Usage Patterns, 2005 (%)
- Figure 8 Cellular Network Subscriber Growth, 2004-2011 ($ Millions)
- Figure 9 Mpls Usage By Percentage Of Telecom Traffic, 2004-2011 (%)
- Figure 10 Most Popular Telecom Data Line Speeds By Market Share, 2005 (%)
- Figure 11 Structure Of An Atm Cell
- Figure 12 Worldwide Npu Pricing Trends By Unit, 2004-2011 ($)
- Figure 13 Top Five Network Processing Unit Vendors By Market Share, 2005
- Figure 14 Worldwide Optical OC-1 Network Processing Unit Revenues, 2004-2011 ($ Millions)
- Figure 15 Market Shares Of Top Five Worldwide OC-1 Optical Network Processing Unit Vendors, 2005 (%)
- Figure 16 Worldwide Optical OC-3 Network Processing Unit Revenues, 2004-2011 ($ Millions)
- Figure 17 Market Shares Of Top Five Worldwide Optical OC-3 Network Processing Unit Vendors, 2005 (%)
- Figure 18 Worldwide Optical OC-12 Network Processing Unit Revenues, 2004-2011 ($ Millions)
- Figure 19 Market Shares Of Top Five Worldwide Optical OC-12 Network Processing Unit Vendors, 2005 (%)
- Figure 20 Worldwide OC-48 Optical Network Processing Unit Revenues, 2004-2011 ($ Millions)
- Figure 21 Market Shares Of Top Five Worldwide Optical OC-48 Network Processing Unit Vendors, 2005 (%)
- Figure 22 Worldwide Optical OC-192 Network Processing Unit Revenues, 2004-2011 ($ Millions)
- Figure 23 Market Shares Of Top Five Worldwide Optical OC-192 Network Processing Unit Vendors, 2005 (%)
- Figure 24 Worldwide Soc Pricing Trends By Unit, 2004-2011 ($)
- Figure 25 Top Five Soc Suppliers By Market Share 2005 (%)
- Figure 26 Worldwide Optical OC-1 System-On-Chip Revenues, 2004-2011 ($ Millions)
- Figure 27 Market Shares Of Top Five Worldwide Optical OC-1 System-On-Chip Vendors, 2005 (%)
- Figure 28 Worldwide Optical OC-3 System-On-Chip Revenues, 2004- 2011 ($ Millions)
- Figure 29 Market Shares Of Top Five Worldwide Optical OC-3 System-On-Chip Vendors, 2005 (%)
- Figure 30 Worldwide Optical OC-12 System-On-Chip Revenues, 2004-2011 ($ Millions)
- Figure 31 Market Shares Of Top Five Worldwide Optical OC-12 System-On-Chip Vendors, 2005 (%)
- Figure 32 Worldwide Optical OC-48 System-On-Chip Revenues, 2004-2011 ($ Millions)
- Figure 33 Market Shares Of Top Five Worldwide Optical OC-48 System-On-Chip Vendors, 2005 (%)
- Figure 34 Worldwide Optical C-192 System-On-Chip Revenues, 2004-2011 ($ Millions)
- Figure 35 Market Shares Of Top Five Worldwide Optical OC-192 System-On-Chip Vendors, 2005 (%)
- Figure 36 Worldwide Transceiver Pricing Trends By Unit, 2004-2011 ($)
- Figure 37 Top Five Optical Transceiver Vendors By Revenue, 2005 (%)
- Figure 38 Worldwide OC-1 Optical Transceiver Revenue, 2004-2011 ($ Millions)
- Figure 39 Market Shares Of Top Five Worldwide Optical OC-1 Transceiver Vendors, 2005 (%)
- Figure 40 Worldwide Optical OC-3 Transceiver Revenues, 2004-2011 ($ Millions)
- Figure 41 Market Shares Of Top Five Worldwide Optical OC-3 Transceiver Vendors, 2005 (%)
- Figure 42 Worldwide Optical OC-12 Transceiver Revenues, 2004-2011 ($ Millions)
- Figure 43 Market Shares Of Top Five Worldwide Optical OC-12 T5ansceiver Vendors, 2005 (%)
- Figure 44 Worldwide Optical OC-48 Transceiver Revenues, 2004-2011 ($ Millions)
- Figure 45 Market Shares Of Top Five Worldwide Optical OC-48 Transceiver Vendors, 2005 (%)
- Figure 46 Worldwide Optical OC-192 Transceiver Revenues, 2004-2011 ($ Millions)
- Figure 47 Market Shares Of Top Five Worldwide Optical OC-192 Transceiver Vendors, 2005 (%)
- Figure 48 Worldwide Backplane Pricing Trends By Unit, 2004-2011 ($)
- Figure 49 Top Five Optical Backplane Vendors By Revenue, 2005 (%)
- Figure 50 Worldwide Backplane Revenues, 2004-2011 ($ Millions)
- Figure 51 Market Shares Of Top Five Worldwide Optical OC-1 Backplane Vendors, 2005 (%)
- Figure 52 Worldwide Optical OC-3 Backplane Revenues, 2004-2011 ($ Millions)
- Figure 53 Market Shares Of Top Five Worldwide Optical OC-3 Backplane Vendors, 2005 (%)
- Figure 54 Worldwide Optical OC-12 Backplane Revenues, 2004-2011 ($ Millions)
- Figure 55 Market Shares Of Top Five Worldwide Optical OC-12 Backplane Vendors, 2005 (%)
- Figure 56 Worldwide Optical OC-48 Backplane Revenues, 2004-2011 ($ Millions)
- Figure 57 Market Shares Of Top Five Worldwide Optical OC-48 Backplane Vendors, 2005 (%)
- Figure 58 Worldwide Optical OC-192 Backplane Revenues, 2004-2011 ($ Millions)
- Figure 59 Market Shares Of Top Five Worldwide Optical OC-192 Backplane Vendors, 2005 (%)
- Figure 60 Typical 4-Byte Frame Used In OC-768 Transmissions