Mapping the Future of Optical Deployments
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1 Mapping the Future of Optical Deployments Andrew Schmitt Lead Analyst September 19 th 2017 ECOC Gothenburg, Sweden
2 MY NETWORK IS A BEAUTIFUL, UNIQUE SNOWFLAKE Customer network designs vary widely across markets Vendors face conflicting requests IP over DWDM Advanced Packet-OTN Switching (L1+L2) Maximum Spectral Efficiency Open Line Systems Open Hardware Interfaces Whitebox Pricing Download Full Data at Cignal AI (Click Here) SHARE OF GLOBAL SPEND ON OPTICAL TRANSPORT (2016) 2H16 OPTICAL CUSTOMER MARKETS REPORT 2
3 CLOUD & COLO IS EATING THE NETWORK Download Full Data at Cignal AI (Click Here) 3 2H16 OPTICAL CUSTOMER MARKETS REPORT
4 HISTORY OF THE WEBCO WHITEBOX COMPUTING: Blade servers designed for general purpose compute were vastly inefficient SWITCHING: Ethernet Switches had too many features, or not enough customization WDM TRANSPORT: What problem needs solving? 4
5 THE MARKET RESPONDS: COMPACT MODULAR Infinera CX/CX2 Cisco NCS 1000 ADVA Cloudconnect Ciena Waveserver AI Coriant Groove G30 Fujitsu 1FINITY T100/T200 5 Huawei OSN902 Nokia PSI-2T
6 COMPACT MODULAR HW SIZE & FORECAST Forecast increased due to adoption outside Cloud & Colo customers Download Full Data at Cignal AI (Click Here) Incumbents and others will use equipment in this category for hardware disaggregation Revenue recognized in North America is often for Cloud and Colo equipment which is used overseas 6 1H17 OPTICAL APPLICATIONS REPORT
7 NOT THE SAME REQUIREMENTS TELCO WEBCO o Many customers o Unpredictable - flexibility important o Transport & Services separate o Outage = customer pain o Minimize stranded bandwidth o Capex growing 5% per year o One customer; me o More predictable network design o Centralized management o More graceful network failure o Manage application priorities o Capex growing way faster 7
8 ADVANCED PACKET-OTN SWITCHING SYSTEMS WHAT: Unified hardware that collapses all OTN and Ethernet switching into a single chassis E.g. Verizon Next Gen Metro WHO: Incumbents who want converged OTN and Ethernet networks for delivery of myriad services via a single platform HOW MUCH: About $2B ($1B ex-china) in Market growing 15% per year, faster growth in 2017/8. CHALLENGE: Requires big R&D commitment to win a bigger share of a shrinking customer market 8 ADVANCED SWITCHING: Hardware with a centralized OTN switch fabric and layer- 2 switching functions; includes distributed switching architectures that can support 4+ cards; does not include line-card muxponders.
9 ADVANCED SWITCHING SYSTEMS - DEFINED Download Full Data at Cignal AI (Click Here) 9
10 OPTICAL NETWORK SUPPLY MODELS Issue RFP and select one vendor. Repeat in a few years and build overlay network. Smaller operators with simple networks Issue RFP and deploy several vendors in isolated domains or in overlay networks. Every operator until a few years ago VERTICAL INTEGRATION Use open line systems & decouple terminal investment from common equipment. Submarine systems, large cloud & colo vendors today Integrate standalone components from multiple vendors: Amps, ROADMS, transponders, Ethernet/MPLS switches. Hardware includes northbound interface and control plane interoperability. AT&T Domain 2.0 Purchase off the shelf whitebox with proven hardware design and specifications. May also have open source software for operation and northbound interface. Facebook Voyager, TIP Project Design hardware, manage contract manufacturer, write and/or find software, manage end-toend equipment lifecycle. Facebook, Google, Microsoft etc. compute & switching DIS-AGGREGATED HARDWARE WHITEBOX 10
11 PROS & CONS OF OPTICAL DEPLOYMENT MODELS VERTICAL INTEGRATION One throat to choke Less opex - more capex Best performance Simplified supply chain Easiest operational model Tied to a supplier Creates culture of vendor dependence Reduced pricing leverage DIS-AGGREGATED Supply chain flexibility Less capex - more opex Choose latest technology Agile deployment culture Operational leverage Over-engineered network Must transition to complex operational model Requires invention of new network management WHITEBOX Buy exactly what you want Maximum opex Maximum control Something Fun to Do Not solving any apparent engineering problems Maximum supply chain risk Network Performance Operational Simplicity Service and Technology Speed Operational Agility THE CULT OF OPEN 11
12 WHAT HAPPENS NEXT Equipment and component vendors continue to open up access to their hardware and software Also find ways to add value in order to build superior vertically integrated network systems Some operators may pursue optical white box but this is not an economically rational decision for almost everyone The Cult of Open Operator business models are changing rapidly, they determine network deployment models 12
13 THANK YOU /cignalai cignalai
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