Market Opportunities for Active Optical Cables at 100 Gbps and Above
Be sure to sign up for CIR's webinar on active optical cabling markets taking place on July 16th. See here to register.
Active optical cable (AOC) suppliers are spreading their wings into video and consumer electronics markets, but most will remain focused on the data center – especially the HPC environment – for years to come.
In CIR’s opinion, AOC suppliers have good reasons to be optimistic in their pursuit of dollars from the data center. Higher data rates continue to lead managers to install more fiber. Multicore CPUs and many-core GPUs (graphics processing units) make the boundaries between HPC and more conventional forms of computing become fuzzier.
Such trends continue to expand the addressable market for AOCs. And most AOC manufacturers have adopted a three-stage business model in which initially the highest data rate AOC products command high margins but sell in small quantities. In the second stage, volumes for AOCs at a given data rate increase, but are still profitable. Finally AOC products become commoditized and become available – if they are available at all – only from marginal suppliers. Then the process begins again.
AOCs were originally CX4 killers, but the decline of CX4 means that this is not a market that AOC manufacturers should be chasing after any more. SFP AOCs are still on the market, but they take up less and less space in suppliers’ catalogs; they are all but commoditized and will simply fade away in the next few years. In our opinion, even 40 Gbps AOCs can no longer be said to be an opportunity as such – they are available from almost every AOC vendor already. Depending on whom one chooses to believe, 40-Gbps interfaces may now cost little more than the equivalent 10-Gbps interfaces.
The opportunities in the AOC space are not all about moving through an evolution of ever higher data rates. There are other ways to create distinct and innovative products. For example, there are fanout products with one type of module at one end of the AOC and several lesser data rate modules at the other. These can be used to connect a switch port to multiple server ports. In another development, Hitachi Cable, which is not otherwise a major player in the AOC space, has its recently released its 24-fiber "Nanocore" single jacket-style cable, which is designed for use in AOCs. The company says that this cable was developed in response to growing requirements for 12X QDR.
100 Gbps AOCs: What’s Next
All that said, the AOC business remains very much about growing data rates. As CIR sees it, the next opportunity in the AOC space will be at 100 Gbps. We think that AOCs operating at this data rate could generate revenues at over $200 million in 2014 and will reach several billion dollars within a few years. Larger data centers are already using 40 GigE extensively on servers and in such cases 100 GigE is a natural technology for inter-switch, switch-to-router and switch-to-storage connectivity. The market for 100-150 Gbps AOCs is not just the 100 GigE market, but also includes the 12-channel QDR and 12 x FDR InfiniBand (IB) markets.
AOCs operating at 100 Gbps have been available from select vendors for several years. But what we have seen in the past year or so is that 100 Gbps AOCs have become much more common, with several Chinese suppliers entering the market with 100/120-Gbps products. While this partly reflects the increasingly sophisticated capabilities of Chinese AOC and module firms, it is also reflects the increased mainstreaming of 100 Gbps.
The first product into the 100-Gbps AOC space was Finisar's C.wire product. Other firms that are already—or soon will—offer 100-Gbps AOCs include 10GTEK, FCI, Fujitsu, InnoLight, Molex and others. In the 100-GigE environment QSFP and CXP modules are used for reaches under 100 meters, but a new form factor—CFP—has also emerged. CFP is used for longer distances—typically over 100 meters and up to 40 km—while QSFP and CXP is used for shorter distances. There seem to be few AOCs that have adopted CFP at the present time. Presumably this this is because there isn’t a fit between where and how AOCs are used and the long reaches of CFP – at least not for now.
QSFP, CXP and AOCs
The analysis above suggests, the 100 Gbps AOC sector is already at the second stage of the business model outlined at the beginning of this article (high volume/but declining margins). As a result, CIR anticipates that there will be a substantial market for both QSFP and CXP AOCs over the next decade. By 2019, for example, our forecasts suggest that the revenues from CXP AOCs will be around $640 million and for QSFP they will be about $620 million or so.
These numbers include all data rates supported by the QSFP and CXP data rates. QSFP, for example, supports several different data rates, beginning at 4 x 10 Gbps up to 4 x 28 Gbps. However, the point here is that QSFP is the point where the non-commodity segment of the AOC market begins today. But eventually QSFP markets will eventually (and inevitably) commoditize; it is possible that this may already have begun to happen.
CXP will be the next opportunity space for AOCs. It provides 12 x 10-Gbps links, so is one place to start with 100 Gbps and it can also supply three 40-GigE channels. It is also specified for use in higher-data rate IB and has received strong support from important companies such as Avago and Finisar. At this point almost every firm offering a range of AOCs includes CXP options.
AOCs at 400 Gbps
Somewhat surprisingly, there are also a few firms that are already offering 400-Gbps AOCs, even though the IEEE is still quite some way from finalizing a 400 GigE standard. An important enabling technology for 400 Gbps AOCs is the new CXP-like CDFP MSA which has specifically been designed with 400 GigE and Terabit Ethernet in mind. Founding members of the CDFP MSA include: Avago Technologies, Brocade, IBM, JDSU, Juniper Networks, Molex Incorporated and TE Connectivity.
The CDFP hot pluggable module encompasses 16 transmit and 16 receive channels to support passive and active copper cables and active optical modules, but as a practical matter, it is hard to imagine that much copper will find its way into the 400 Gbps environment.
The CDFP group has recognized that AOCs will have an important role in the 400 Gbps environment saying that it plans to create a common electro-mechanical definition, which will enable "the networking industry to cost effectively adopt copper cabling and active optical cable (AOC) technology that can be used across all conforming switching and routing platforms."
For now, however, the three companies to watch in this space are Finisar, Molex and TE Connectivity, all of which have already announced CDFP AOCs. Finisar demonstrated its 400- Gbps AOC at OFC 2014. It is a "short-reach, interconnect cable incorporating 16 channels of 25 Gbps VCSELs running over duplex, parallel-ribbon, MMF." TE Connectivity CDFP offering is based on its latest 25 G optics and its "Coolbit" optical engines. Supposedly, this product is close to close to being brought to market.
Meanwhile, at OFC 2014, Molex unveiled plans for the QuatroScale line, a planned portfolio of products based on 28-Gbps silicon photonic products that will support 100- Gbps, 200-Gbps and 400-Gbps connectivity. Molex's zCD AOC has been selected as the interface for the CDFP consortium's 400-Gbps hot pluggable module.
CDFP AOCs could turn out to be the next big thing in AOCs and offering them could be one way that established AOC makers can protect their businesses against the looming prospects of looming Chinese competition. At the coming ECOC and OFC shows, we expect CDFP AOCs to be prominently displayed.
CIR does not expect CDFP AOCs to generate much revenue for the next few years, but we anticipate that the sales of this cabling will reach $125 million by 2019.