JDSU acquisition of Agility foreshadows DWDM interface transitions

By Daryl Inniss, Vice President, Ovum-RHK

JDSU's acquisition of tunable laser supplier Agility highlights two industry-wide DWDM interface transitions: the shift to wideband tunability at 10 Gbps and to pluggable transceivers for 2.5 Gbps. The ultimate solution, though complicated, should be tunable pluggable transceivers at both 2.5 and 10 G, as it drives up volume and hence lowers cost. Although this solution is three to five years away, OC vendors are already developing technical approaches, as was evident by the JDSU acquisition announcement. But with solid reasons behind the divergence, how will the two markets reconverge? Ovum-RHK is currently analyzing this complicated area and its many intertwined parameters. We believe this market will unfold dramatically in the next few years; our upcoming WAN forecast will analyze these market transitions in greater detail and will attempt to answer some of the questions presented in this Brief.

The JDSU announcement to acquire Agility foreshadows both short- and long-term changes on DWDM interfaces and raises numerous compelling questions, which are presented throughout this Brief. In the short term, widely tunable lasers will increase from 15 percent in 2005 to over 60 percent in 2010 and SFP transceivers will see widespread adoption in 2006 and 2007. These estimates-based on interviews that Ovum-RHK conducted with major system and component vendors-will be presented in greater detail in our upcoming WAN forecast report.

The long-term changes involve pluggability on the line side at 10 Gbps and tunability for the pluggable transceivers at 2.5 Gbps. The best of all worlds is convergence or one solution that supports both 2.5 and 10 G. However, no one is sure if tunable lasers can operate in pluggable transceivers at the necessary cost/performance levels. Hence, system vendors are faced with a roadmap dilemma, while component vendors are faced with a market growth opportunity provided the technological advances in both pluggability and tunability play determining roles in the outcome for DWDM interfaces.

The 10 Gbps transitions

The 10 Gbps market is largely composed of system vendors purchasing widely tunable lasers to make their own line cards or 300-pin MSA-based transponders that are based on widely tunable lasers. But this is not the end of the story. Line-side XFP transceivers are in development and will likely see volume deployments in 2007/2008. With a range of 80 km, these transceivers are targeted for metro applications. One open question is whether these transceivers will be tunable. We further ask, what is the rationale for their use? Our conversations with system vendors revealed only a mild interest in these devices, mainly because system vendors can't rationalize a move to XFP so soon after designing widely tunable transponders and with no urgent need for density. However, there is definitely an overwhelming desire to use XFP on the client side.

The 2.5 Gbps transition

The 2.5 Gbps DWDM market is about to transition from being 66 percent discretes to possibly being 50 percent SFP transceivers in the next year. System vendors have redesigned line cards in preparation for this transition. They like the lower prices, higher densities, uniformity, and potential for lower power consumption.

Some system vendors want tunability in their interfaces and are using temperature-tunable interfaces today. Some vendors are interested in wideband tunables and lamented that there is no single solution for 100 and 50 GHz.

At 2.5 Gbps, three important questions remain: What will the adoption rate be for transceivers? For tunability? And at what level of tunability?

EMLs versus DMLs at 2.5 Gbps

Today's 2.5 Gbps market is shared between EMLs and DMLs. However, as the market transitions to SFP transceivers, concerns about the use of EMLs arise. EMLs tend to be bigger than DMLs and consume about 1 W more of power, making them unlikely candidates for SFP form factors. As the market transitions to SFP, will EMLs lose market share? There are alternative form factors, such as XFPs at 2.5 Gbps. In this case, the same laser and form factor for 10 G will be used for 2.5 G. Can these devices meet the market price performance level? Finally, does DML or EML give a wavelength tunability advantage? Stay tuned.

The bottom line

The DWDM interface modules at 2.5 and 10 Gbps are transitioning to intermediate points with the final positions still to come. Widely tunable lasers are being accepted at 10 Gbps and pluggable transceivers at 2.5 G. The final solution will be tunable lasers in pluggable modules at both 2.5 and 10 Gbps. This solution is still 3-5 years away from market acceptance, but the technical work, which JDSU and others have already begun, must be done now to meet that timetable. Ovum-RHK will share its view of the likely evolution of the market in its upcoming WAN forecast.

Daryl Inniss has 15 years of optoelectronics experience. He is responsible for worldwide coverage of pump lasers; erbium, Raman and semiconductor optical amplifiers; dispersion compensators; dynamic gain equalizers; reconfigurable and fixed optical add/drop subsystems; and switch matrices. Before joining Ovum-RHK, Daryl worked for JDS Uniphase as Technical Manager for Raman Amplifier Development.