Datacom Market Update
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- Lawrence Lynch
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1 Datacom Market Update LightCounting Market Research LightCounting Webinar Dale LightCounting Murray February Webinar 12, February ,
2 Datacom Market Highlights Challenging macroeconomic conditions continue to impact IT spending. Most expect this to continue. China down [e.g. IBM hardware down 40% in Q3] Emerging markets now showing weakness Particularly Eastern Europe, Russia U.S. Federal spending has been down for 3-4 quarters. Most system equipment companies feeling this pain. Much belt tightening; Big and small players reducing headcount Server market down: IDC says -3.7% in Q3 Traditional storage down, Emerging storage growing HPC high end slumped in 2013 vs
3 Datacom Equipment $30,000 $25,000 Servers, networking and storage 2012: up 1.7% 2013: down 1.6% $20,000 $15,000 $10,000 $5,000 $- Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Q4 13 Source: Financial Reports and guidance from Cisco, HP, Dell, IBM, EMC, Juniper, Brocade, QLogic and Emulex. (Dell Q3-Q4 assumed flat) 3
4 Mixed Results for 2013 Datacom 2013 vs Cisco - Switches, Routers, Data Ctr 1% HP - Enterprise Group -6% Dell - Servers, Networking, Storage EMC Storage products 4% IBM - Servers and Storage -17% Juniper - Routers and Switches 15% Brocade -2% Qlogic -9% Emulex -7% Mellanox -22% Total -1.6% Guiding weak Q4 19% Assumes Q3-Q4 flat 4
5 Datacom Equipment Vendor Highlights Dell had a very strong H in servers and networking: up 28% vs. H Dell is now private. Q3 results broke Cisco s 10-quarter string of growth Routers down 2% as new product cycle begins. Switches flat. New core routing product: Network Convergence System (NCS) based on new npower X1 silicon, a 400 Gbps network processor Data Center group (blade systems with unified communications) up 32% but still <5% of revenues. Claim they are now #1 in blade systems Big switches with next-gen Ethernet speeds are arriving e.g. Cisco Nexus 77xx supports 96 40GigE or GigE ports Arista Networks 7500 supports GigE or GigE ports HP still working their turnaround plan; Good Q3 a result of one large hyperscale order; forward guidance is down 5
6 Datacom Equipment Vendor Highlights Fresher products produce strong results at Juniper Router sales dramatically outpacing Cisco router sales; Switch sales even better: +36% for Q4, year-on-year IBM getting out of x86 server business Mainframes up, all else down. Servers down 28% in Q4, year on year. Group to be sold to Lenovo Committed $1.2B to build 40 cloud datacenters in 15 countries 6
7 Source: EnterpriseTech 7
8 Main Datacom Focus Areas The Cloud, in every way possible Virtual everything, including Software Defined Networking Dell partners with Cumulus Networks for Open Networking Dell s bare metal switches to run Cumulus Linux OS Big Data Analytics and HPC merging Security Switching fabrics taking hold 8
9 Quarterly Revenues ($M) Transceiver Suppliers $1, : down 6.7% 2013: up ~6.3% $800 Opnext $600 Emcore Oplink NeoPhotonics $400 Accelink Oclaro Avago $200 Finisar $- Q Q Q Q Q Q Q Q Q Q Q Q Some Q4 results estimated from guidance 9
10 Q Q Q Q Q Q Q Q Q Q Q Q Datacom Optical Components $ : up 14% 2013: up 16% $400 $300 $200 $100 Needs updating: Vendor survey in progress $- Source: LightCounting Market Survey 10
11 Ethernet Optical Transceivers Buzz is all about 100G, but 10G is the bread and butter of the industry 40G ramping faster than expected as 4x10G breakout has been very popular Native 40GigE deployment now beginning New Cisco Bidi transceiver (2x20Gλ) supports this 40G-LR4 sub-spec modules more popular than full spec 11
12 Replacement of Pluggable Modules? High density EOMbased switch blades instead of pluggable modules from Arista Networks. Will this start a trend? 12x10G Embedded Optical Module MPO Connector Interfaces 12
13 Sales ($M) Ethernet Optical Transceiver Market $1,000 by Data Rate $800 $600 1 GigE 10 GigE $ GigE $ GigE $
14 Units Ethernet Optical Transceiver Unit Shipments by Data Rate 15,000,000 1 Gbps 10,000, Gbps 40 GigE 5,000, GigE
15 Q Q Q Q Q Q Sales ($M) Ethernet Optical Transceivers 1 GigE 10 GigE 40 GigE 100 GigE $150 $100 $50 $0 15
16 Storage Market Soft and Morphing Unstructured data [stored on Network Attached Storage] growing much faster than structured data [stored on SAN arrays] Drives 10GigE instead of Fibre Channel. Traditional SAN storage still soft e.g. EMC high-end storage up 2% for 2013 Emerging storage technologies are growing e.g. Flash, virtualized storage e.g. EMC Emerging Storage up 54% for
17 Q Q Q Q Q Q Sales ($M) Fibre Channel Optical Transceivers 4 / 2 / 1 Gbps 8 / 4 / 2 Gbps 16 / 8 / 4 Gbps $50 $25 $0 17
18 Q Q Q Q Q Q Sales ($M) Optical Interconnects Active Optical Cables Parallel Transmitters and Receivers Parallel Tranceivers $30 $20 $10 $0 18
19 IEEE Latest Industry Events 802.3bm is in the Working Group Ballot phase The 400G Study Group adopted its objectives and all documents to begin the approval process to become an official Task Force. At least 100m over MMF At least 500m over SMF At least 2km over SMF At least 10km over SMF BER of at the MAC/PLS service interface Ethernet Alliance Technology Exploration Forum on the Future of Ethernet with Dr. Bob Metcalf, inventor of Ethernet Looked at directions for Ethernet and technologies to get there SC13 Supercomputer Show Lots of InfiniBand OIF Workshop on 400G interfaces 19
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