Ovum forecast the 2011 growth for Optical Components (OC) to be 15% and our long-term outlook is for multiple sequential years of double-digit growth. The demand for higher bandwidth in the network core, in access, and in datacom networks and the demand for network agility are driving growth in this forecast.
The CAGR is 16% for 2009 through 2015 and the market is forecasted to reach US$10.5billion by 2015. OC is growing significantly faster than ON and faster than all of the other equipment segments. Daryl Inniss, VP and Practice Leader explains: "This relative performance is not sustainable. Either the OC level will collapse due to excess inventory or the ON level will start to expand, consuming the purchased components. We believe the latter is the most likely scenario for 2011. OC vendors have much better visibility on inventory since 2007. Since then most of the leading OEMs requested that OC suppliers decrease lead times from 8-12 weeks to 4 weeks and some requested OC suppliers to hold inventory. The OC suppliers could not recognize revenue until products were pulled from inventory."
Asia-Pacific became the largest ON region in 2009 and Ovum is projecting Asia-Pacific to retain that lead for the next few years, with USD 6, 679 billion by 2015. China is the largest driver behind the growth in the region. "The ascendency of India from an almost nonexistent market to one now challenging Japan for second place in Asia-Pacific On is worthy of note", adds Inniss, based in USA. "The key takeaway for the components industry is to continue to strengthen positions in the Asia-Pacific ON food chain, either directly with carriers or with system vendors based or selling in the region".
The key technology trend from the ON system perspective is the adoption of 40G and 100G. System vendors are working hard to place new technologies in front of carriers, and the carriers in turn have been asking for more cost-effective bandwidth. Non-carrier actors, Google and Facebook, have also been enticing the move to higher and higher capacities. For industry watchers that have been following 40G since the year 2000, the "sudden" and rapid adoption of 40G has been remarkable.
