The Photon Revolution Presented by Elizabeth J Bruce

The Photon Revolution Presented by: Elizabeth J. Bruce Research Analyst 19 March 2018 Aberdeen Group Boston · Palo Alto · Amsterdam www. aberdeen. com Project #

Optical Components “Optical technology is now the most rapidly improving technology in industrial history” – James Crowe, Founder and CEO of Level 3 Communications Source: Aberdeen Group © 2000 Practice Area Overview 2

Why Fiber and Photons? What if you wanted to download The Matrix on DVD…. How long would it take? Dial-up Modem Cable Modem or DSL Standard Ethernet Multiplexed Fiber Source: Aberdeen Group © 2000 56 Kb/s 1 Mb/sec 100 Mb/sec 15 hours 1 hour 6 mins 35 secs Practice Area Overview 3

Market is Paying Attention! - Nov 15, 2000 Source: Aberdeen Group © 2000 Practice

Agenda • Component Technologies • Technology Trends • The Market: Big Picture • Dynamics

Optical Components. The Big Picture • All about Photons • Parallels to Semiconductor Industry • Technology – competing technologies – innovation in materials & integration • Market – emerging companies – consolidation: mergers & acquisitions Source: Aberdeen Group © 2000 Practice Area Overview 6

Optical Networking: Big Picture Global Crossing, Level 3, Qwest Service Providers Nortel, Alcatel, Ciena Systems Components Electronics JDSU, Corning, Lucent Optical Materials Source: Aberdeen Group © 2000 Practice Area Overview 7

Component Applications Transmitter 1 Receiver 1 Transmission 2 2 3 3 Optical Amplifiers 4 Optical Multiplexor Lasers & Modulators Source: Aberdeen Group © 2000 4 Optical Demultiplexor Detectors Practice Area Overview 8

Optical Spectrum Use by Application SONET Visible Light 400 700 DWDM Short Reach 800 1000 1300 Wavelength (nm) 1500 • Telecommunications wavelengths fall into different bands – 800 nm – 1300 nm – 1550 nm Source: Aberdeen Group © 2000 Practice Area Overview 9

Component Materials & Applications In. P Si. ON Photonic Crystals Materials Polymers Li. Nb. O 3 Thin Film Filters Silica-on-Silicon Switches Modulators Waveguides Applications Mux/Demux Attenuators There a multiple number of component materials and a multiple number of applications. Source: Aberdeen Group © 2000 Practice Area Overview 10

Optical Component Classes ACTIVES Lasers Detectors Modulators Source: Aberdeen Group © 2000 PASSIVES Multiplexers

Optical-Networking Components • Transmit & Receive Devices • Optical Amplification Products • Optical Switching & Cross-Connect Modules • WDM Modules • Fiber Optic Products Source: Aberdeen Group © 2000 Practice Area Overview 12

Component Applications Transmitter 1 Receiver 1 Transmission 2 2 3 3 Optical Amplifiers 4 Optical Multiplexor Lasers & Modulators Source: Aberdeen Group © 2000 4 Optical Demultiplexor Detectors Practice Area Overview 13

Transmit Devices • EDGE-EMITTING – Distributed Feedback Lasers (DFB) – Fabry-Perot Lasers (FP) • Vertical Cavity Surface Emitting Lasers (VCSELS) • TUNABLE LASERS Source: Aberdeen Group © 2000 Practice Area Overview 14

VCSELS? • Major application for VCSELS to date: short reach • Recent developments at longer wavelengths • Advantages: – On-chip testing before wafer cut into individual devices – Output beam is nice and big and round – Relatively high yield devices • Disadvantages: – Low power Source: Aberdeen Group © 2000 Practice Area Overview 15

Tunable Lasers • Edge-emitting lasers, VCSELS (MEMs and Electro-optic), NCSELs, External-cavity lasers using MEMs technology • Application: – Inventory reduction – DWDM networks – Dynamic wavelength provisioning • Companies: Lucent, Bandwidth 9, Agility Communications, Altitun, Core. Tek, …. vs. Source: Aberdeen Group © 2000 Practice Area Overview 16

Component Applications Transmitter 1 Receiver 1 Transmission 2 2 3 3 Optical Amplifiers 4 Optical Multiplexor Lasers & Modulators Source: Aberdeen Group © 2000 4 Optical Demultiplexor Detectors Practice Area Overview 17

DWDM modules • Different Technologies: – Arrayed Waveguide Gratings – Thin Film Filters – Fiber Bragg Gratings • Companies: JDSU, Oplink Communications, Avanex, Kymata, Bookham Technologies, Nanovation Technologies, Lightwave Microsystems…. Source: Aberdeen Group © 2000 Practice Area Overview 18

Optical Switching Applications • External Modulation • Protection Switching/Restoration • Dynamic Optical Add/Drop Multiplexers (OADMs) • Dynamic Provisioning • All-Optical Cross-connect (OXC) Source: Aberdeen Group © 2000 Practice Area Overview 19

Optical Switching Technologies • • MEMs – Micro. Electro. Mechanical Liquid Crystal Opto-Mechanical Bubble Technology Thermo-optic (Silica, Polymer) Electro-optic (Li. Nb 03, SOA, In. P) Acousto-optic Others… Source: Aberdeen Group © 2000 Practice Area Overview 20

Component Applications Transmitter 1 Receiver 1 Transmission 2 2 3 3 Optical Amplifiers 4 Optical Multiplexor Lasers & Modulators Source: Aberdeen Group © 2000 4 Optical Demultiplexor Detectors Practice Area Overview 21

Optical Amplification Why? – Extend distance light signal can travel without regeneration • Erbium-Doped Fiber Amplifiers (EDFAs) – application in long haul. Today’s amplifier of choice. • Raman Amplifiers – application in DWDM • Erbium-Doped Waveguide Amplifiers (EDWAs) – application in metro and access networks Amplifier Standard Fiber Pump Lasers Source: Aberdeen Group © 2000 Practice Area Overview 22

Integration - Today Optical Interleaver Laser DWDM Module Add/Drop Mux Source: Aberdeen Group ©

Integration - Today Source: Aberdeen Group © 2000 Practice Area Overview 24

Integration - Future Photonic Chip Source: Aberdeen Group © 2000 Practice Area Overview 25

Industry Trends • Integration. Demand shifting from component level to integrated modules. • Scalability. “Pay-as-you-grow” philosophy. • Innovation. Product life cycles getting shorter. Suppliers must have strong R&D. • Customization. Working with customers to provide next- Practice Area Overview 26 Source: Aberdeen Group © 2000

Integration • Parallels to the semiconductor industry ~25 years ago • discrete components •

Integration Degree of Integration Integrated Active/Passive Systems Integrated Passive Building Blocks Time Source: Aberdeen

Scalability • Industry referred to as a “cottage industry” • Optical components are sophisticated devices: – Requires people with experience – Fiber-handling to wafer processing to thin film production • Packaging is a significant portion of the cost (up to 90%). • Difficult to implement Automation and scale Manufacturing • No standard automation equipment – often times proprietary methods Practice Area Overview 29 Source: Aberdeen Group © 2000

Customization • Everything is custom – catalogs just show what we are capable of… • Custom Integration: Optical ASICs. • Standard packaging and custom optics. Source: Aberdeen Group © 2000 Practice Area Overview 30

Market Size • According to OIDA, – – Total Market 1999: (Communications, Storage, Display, Image Acquisition) : $58. 9 B Communications: $28. 9 B -Lightwave, Dec 1999 Source: Aberdeen Group © 2000 Practice Area Overview 31

Market Dynamics – 100’s of Suppliers. – Enormous growth: suppliers are rapidly expanding their manufacturing facilities and investing in production equipment. – Consolidation and acquisition of suppliers is changing the component landscape on very short time scales. – Confusing Space: Company A may buy from, compete with and form a partnership with Company B. Source: Aberdeen Group © 2000 Practice Area Overview 32

Component Demand Industry-wide component shortage. Number of Nodes Number of Channels 80 120 Source: Aberdeen Group © 2000 230 Long-Haul Metro Access Enterprise FTTH Demand for Components Practice Area Overview 33

Key Findings • Difficult for new systems suppliers to guarantee a supply of components. • Maintain close integration between developments in component technologies and next-generation networking equipment • When and what to outsource? ? – Various levels of outsourcing at equipment level: • • Cisco. Partner with Corning. Ciena. Some key component development in-house. Nortel/Alcatel. Major component divisions Lucent. Spin-off components division. Source: Aberdeen Group © 2000 Practice Area Overview 34

Key Findings • Sources, modulators, and receivers at 40 Gb/sec • Tunable Lasers •

Key Findings • Amplifier products: Raman, EDWAs • Higher channel count WDM modules •

Key Trends • Manage Bandwidth: Optically instead of Electronically. • Emerging metro/access market. –

Suppliers Source: Aberdeen Group © 2000 Practice Area Overview 38

Conclusions • It’s all about PHOTONS • The optical components industry is growing fast – but still at an early stage • Impact is significant - from long haul transport to metro to enterprise to computer interconnects Source: Aberdeen Group © 2000 Practice Area Overview 39

Thank You! ABERDEEN GROUP Boston, MA www. aberdeen. com Mc. Cormick@aberdeen. com Source: Aberdeen

SUPPLEMENTAL SLIDES Source: Aberdeen Group © 2000 Practice Area Overview 41

Market Demand • Demand: Increased bandwidth requirements – – – Fiber to the Home/Curb Streaming media, video-on-demand Holographic telephony Wireless services Video-equipped phones Distribution of: media, software, CDs, DVDs, the broadcast entertainment world – Unforeseen applications (things like Napster…) Source: Aberdeen Group © 2000 Practice Area Overview 42

Market Segments – Ultra-Long Haul. Cross-country and long distance connections between cities. – Long-Haul. Provide point-to-point traffic between major cities. Used by large service providers. – Metro (MAN). Connections within urban areas. Provide service to a variety of customers in a metropolitan region. – Access Systems. Provide service to an end-user. Connections to Businesses and Homes. – Enterprise/Local Area Network (LAN) and Storage Area Networks (SAN). Gb and 10 Gb Ethernet, Fibre Channel, etc. . Source: Aberdeen Group © 2000 Practice Area Overview 43

Photon Transport Today Total Capacity Channel s Single Distance Channel 7. 04 Tb/s 176 40 Gb/s ? ? Alcatel 5. 12 T/s 128 40 Gb/s Over 300 km 211 10 Gb/s 7, 200 k m Sieme ns AG Fujitsu 2. 11 Tb/s Source: Aberdeen Group © 2000 Practice Area Overview 44