Opportunities for CXP AOCs and Transceivers

For those of you that believe that 100-Gigabit Ethernet is just around the corner, I have a bridge I want to sell you. But seriously, we haven’t even seen the height of 10-Gigabit Ethernet adoption yet, and there are some equipment companies saying they will sell 100’s-of-thousands of CXP 100GBASE-SR ports in 2011. Are you kidding? What is the application and where is the need?

First, 10GE has taken more than eight years to get to a million ports – we believe it will take 40G and 100G even longer. Second, even for clustering applications, which could potentially drive demand faster, 100GE port-adoption won’t be that quick. Ethernet architecture is different than the InfiniBand (IB) one – the density of an IB director-type switch provides over a Terabit per second, whereas the newly released 40GE ones are around 250G (due to both slower data rate and fewer ports). IB is also based on a CLOS architecture where you have equal bandwidth everywhere, while Ethernet is more often used in an aggregated network so ends up having a lot less higher-speed ports than lower speed ones. This is further supported by clustering applications that use ToR switches that are currently Gigabit connections to the servers with 10G uplinks to the network core. These will be upgraded to 10G downlinks and 40G uplinks first and this won’t happen quickly.

While several IP router manufacturers claim to have the need for 100’s of thousands of 100GBASE-SR CXP ports in 2011, I have found no evidence of this. Who are their customers? In fact, even those companies that could use 100G ports today, i.e. Google, Facebook , IXCs, etc., would need six months to a year to evaluate IP router products before they would deploy them. Since these devices do not yet exist, the reality is that the market will really not begin to materialize until at least 2012. Right now, the majority of router connections are still Gigabit Ethernet or OC-48 (2.5G) or below with OC-192 (10G) or 10GE being implemented on an as-needed basis. Until routers transition through 10G, then probably 40G, 100G installations will be few and far between.

But, there is a market for CXP AOCs today – InfiniBand. This is becoming a volume market now and will continue to be the best opportunity for CXP AOCs for at least the next few years and probably over the lifetime of the CXP products. In fact, we expect the volume of InfiniBand CXP AOCs to be at about six million by 2015. By comparison, the total volume of Ethernet CXP AOCs is expected to be less than 100-thousand. While 100G Ethernet clustering applications will initially use CXP AOCs, customers in these markets prefer to use pluggable modules mainly because they are used to structured cabling solutions and like their flexibility and ease of use, so AOCs will quickly give way to pluggable modules as they are developed. 100GE CXP ports may eventually eclipse InfiniBand once it permeates most data center distribution and core networks, but this will take longer than any of these equipment vendors anticipate I think.