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Profitability of the Optical Component Business Improved Last Year and It May Set a New Record in 2016

The average profitability of optical passive component and module suppliers was very close to zero over the last 5 years, despite strong demand for optics. Compared to every other level of the industry supply chain, profitability of the optical component manufacturers was the lowest by far.

Financial reports of several suppliers of optics started to show signs of improvement over the last 2-3 quarters. The average profitability of optical component and module vendors was 2% in 2015, compared to a loss of 1% in 2014. There is a good chance for reaching 5-7% profitability in 2016-2017 and setting a new record. The highest profitability achieved so far was 5.5% in 2010, preceded by more than ten years of heavy losses.

Net profit margins in the optical components value chain

Source: Public financial reports

Several component vendors restructured their businesses in 2013-2014 and these efforts are starting to pay off now. Accelink, Applied Optoelectronics, Coadna, Neophotonics and Oclaro reported significant improvements in financial performance. Acacia joined the list of publicly traded vendors recently and holds the record with a 17% net margin for 2015. Finisar’s profits started to improve in the second half of 2015 and we expect this trend to continue.

However, the average profitability is likely to stay in the single digits for a while. This industry is very competitive and it is likely to remain so for the next several years. Demanding customers, shorter product lifecycles and investments required to support development of new products are a heavy burden for suppliers. There are close to 40 vendors in the race to offer 100GbE optics to the cloud companies building mega-datacenters. Not many of these vendors will be successful in the long term, but they will continue to put pressure on the profitability of larger publicly traded companies in the industry.

Many start-up companies, betting their future on supplying high-speed optics to cloud vendors, develop products based on silicon photonics and expect that this new technology will give them a sustainable cost advantage. LightCounting’s report on Integrated Optical Devices offers detailed analysis of the opportunities for silicon photonics technology, and recognizes the potential advantages of this technology. However, we expect that a majority of high-speed Ethernet optics used in mega-datacenters will still be based on more established InP and GaAs based optics even in 2021.

Despite all the risks, developing new manufacturing technologies offers a path to sustainable competitive advantage and long-term profitability. Silicon photonics holds a promise for being such a technology. High-valued acquisitions of silicon photonics companies and the recent IPO of Acacia offered much needed success stories for investors. However, the risk remains high. Many other vendors, starting just to ship silicon photonics based products now, will have to prove themselves in 2016-2018.

DK Photonics – www.dkphotonics.com specializes in designing and manufacturing of high quality optical passive components mainly for telecommunication, fiber sensor and fiber laser applications,such as 1064nm High Power Isolator,1064nm Components, PM Components, (2+1)x1 Pump Combiner,Pump Laser Protector,Mini-size CWDM,100GHz DWDM,Optical Circulator,PM Circulator,PM Isolator,Fused Coupler,Mini Size Fused WDM.

Field-Terminated Fusion Splice-On Connector-North American Market Forecast

According to ElectroniCast, the quantity of field-terminated fiber optic splice-on connectors in North America will increase at an explosive annual rate of 41.9% …

ElectroniCast Consultants, a leading market research & technology forecast consultancy addressing the fiber optics communications industry, today announced the release of a new market forecast of the consumption of field terminated fiber optic fusion splice-on connectors in North America.

Field terminated fiber optic fusion Splice On Connectors (SOC) are installed for rapid repairs or for limited space situations where pre-terminated fiber cabling may be difficult, such as when the cable assembly needs to pass through small openings such as conduit. The splice-on connectors are an option when the precise length of the optical fiber link is not pre-determined and a field-installed termination solution is required, such as in Fiber to the Home (FTTH) and other communication applications.

Last year, 306-thousand field-terminated fiber optic fusion splice-on connectors were installed in non-OEM applications in North America. The number of connectors is forecast to increase at an explosive rate of 41.9% per year, reaching 2.49 million units in 2020. Market forecast data in this study report refers to consumption (use) for a particular calendar year; therefore, this data is not cumulative data.

The Telecommunications application category is forecast to maintain the leadership in relative market share through the year 2018, until the Premises Networks application category is set to capture the lead. Telecommunication use is forecast for 35.5% annual growth in quantity (2014-2020), mainly driven by access optical fiber deployment. The Cable TV application is also driven by the use of connectors for FTTH (Home) and FTTB (Building/MDUs – Multiple Dwelling Units).

The market forecast segments the connectors by single-mode and multimode optical fiber, as well as into the following types: MPO, LC, FC, ST, SC, and other. The use of single mode fiber optic field-terminated fusion splice-on connectors in North America is forecast to increase from 173.8-thousand units in 2014 to 1.49 million in 2020. Multimode fiber is best suited for use in short lengths, such as those used in datacom and specialty networks and in 2020, multimode connectors are expected to reach 1-million units.

“In 2014 in North America, 4.3-thousand new fusion splicers were brought into Premises Datacom, and the use of field terminated fusion splice on connectors is a major market driver for the use of fiber optic fusion splicers used in premises network applications, the data center (DC) and longer link length datacom cable installations,” said Stephen Montgomery, Director of the ElectroniCast market study.

“The SOCs are emerging as a viable alternative to pre-terminated fiber optic cables (pigtail and cable assemblies/ patch cords). Also, based on primary research interviews with network planners and installers, we are finding that field terminated fusion splice-on connectors are rapidly being accepted as a go-to solution. With SOCs, communication network technicians can install reliable cable links with exact lengths, eliminating cable shortness or excess slack that is typically a result with the pre-terminated cable solution,” Montgomery added.

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The Modern Data Center – Modular Data Center

The modern data center is a complex place. The proliferation of mobile devices, like tablets and smartphones, place an ever-increasing pressure on the IT departments and data centers. End-user and customers’ expectation levels have never been higher and the demand for data shows no sign of slowing down. Data center managers must manage all of these elements while also remaining efficient and keeping costs under control. So where does the data center go from here?

One thing I have noticed in the evolution of the modern data center is that the facilities are gaining importance; improving energy efficiency and IT management have come to the forefront. Maximizing the organization’s resources is vital, and that means delivering more to facilities and equipment without expending more on staffing. IDC forecasts that during the next two years, 25 percent of all large and mid-sized businesses will address the power and cooling facility mismatches in their data centers with new IT systems and put a 75 percent cap on data center space used. So there again is the crucial challenge of doing more and innovating while keeping budgets and spend under control.

Another key part of the next generation data center mix is automation. Today’s data center manager is engaged in sourcing the right automation tools that will help them manage energy consumption and add new technology without disrupting normal operations. These are a few of the key challenges in the modern data center—so data center managers and IT departments must find ways to address them.

Where does the Data Center Go Next?

At the heart of data center evolution is the information technology sector’s rapid rate of change. Many new products and services must be implemented with much less time to value, and data centers need to be agile enough to assess and accommodate them all. If you examine enterprise data centers, then you might observe the ways that cloud computing and hyperscale innovations are displacing traditional enterprise systems, with new paradigms pioneered by innovators like Amazon and Google. With new options being developed, enterprises now have to chart strategies for cloud computing, including public, private or hybrid cloud. Gauging where the technology will go next is difficult to tell. Will the traditional vendors, such as Cisco and EMC, prevail or will new paradigms from Nutanix or Simplivity disrupt and displace these traditional data center dominators?

The race is on to manage the rapid rate of change while also staying agile, meeting end-user expectations and managing costs. For example, data center managers must handle the level of capacity their data center requires while ensuring they don’t overspend on unused capacity. This is where the focus on data center design comes into play.

Taking the Data Center Forward

These specific needs and challenges that the modern data center faces require working with the right tools and solutions. Modular, purpose-built data center infrastructure allows organizations to develop data center services based on need—when capacity rises and where capacity is needed. For example, we’ve observed in Singapore that most data centers operate slightly above 2.1 Power Usage Effectiveness (PUE). This means that companies spend more on cooling their data center rather than on operating and powering the IT equipment. It is a simple challenge—drive efficiency without impacting operations. You want to drive PUE down to approximately 1.06, regardless of where you need to operate, and reap huge energy savings while better serving customers. If done right, there is a positive environmental impact.

Changing the paradigm of the traditional data center enables organizations to reap these rewards. Assessing and establishing business objectives that reflect what is possible, rather than what always has been or what is easier and more comfortable, has led to innovative services and new business models that reset the competitive standards for everyone. Better PUE is a mandatory step in this process. The PUE journey continues as evidenced by Amazon, which had recently taken to harnessing wind to power its data centers. Modular data centers will play a major part in this PUE journey, thanks to more efficient use of energy and greater flexible support for resiliency and compute density.

How much do you know about CWDM Multiplexer and DWDM Multiplexer

CWDM multiplexer and DWDM multiplexer are two main products of WDM multiplexer. The full name of WDM, CWDM and DWDM are wavelength division multiplexing, coarse wavelength division multiplexing and dense wavelength multiplexing respectively. How much do you know about them? If you have no idea, the following introduction will help you a lot.

In the very first place, let’s get to know what the WDM is. Based on a single fiber optic transmission, many optical signals that are loaded with information and have different wavelengths can be synthesized into one single beam by WDM multiplexer. Then, a special communication technology will be adopted to separate those optical signals at the receiving terminal. On the basis of WDM technique, the CWDM device and DWDM device are two popular products in the current market.

CWDM device

When it comes to the CWDM multiplexer, first of all, it provides service for metropolitan area network access layer, whose working principle is in line with WDM multiplexer. However, it simplifies the structure largely. For example, the filter film layer number of CWDM is just 50, while the WDM is as many as 200 layers. That is to say, the rate of finished products has been improved and the cost has been reduced largely. Besides low cost, the CWDM device is also advantageous in small volume, small power consumption, convenient maintenance and large transmission capacity. The laser device in the system doesn’t need semiconductor refrigerator and temperature controller, which can lessen the power consumption obviously. However, the CWDM also has shortcomings. For instance, developing and simplifying the optical transceiver module and optical component is urgent to be solved.

DWDM device

As to the DWDM multiplexer, comparatively speaking, it makes the best use of fiber-optical bandwidth and enhances the message capacity of cellular system, which is well-known for simple dilatation and stable performance. Integrated system and open system are two dominant application systems of DWDM multiplexer, which are based on different wavelength conversion technologies. No matter which system is adopted, the free-running 1510nm wavelength will be chosen to carry OSC or optical supervisory channel so as to transmit information. Such an OSC is a comparatively independent subsystem, which offers maintenance and management information.

The last question is what advantages WDM technique has when compared with traditional transmission methods. Generally speaking, it includes such aspects as making best use of low-loss wave band, transmitting several optical signals in one optical fiber, good flexibility, low investment cost, excellent system reliability and fast and convenient recovery.

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Do you know these about CWDM Multiplexer and DWDM Multiplexer?

Do you know these about CWDM Multiplexer and DWDM Multiplexer?

Wavelength division multiplexing (WDM) is a technology or technique modulating numerous data streams, i.e. optical carrier signals of varying wavelengths (colors) of laser light, onto a single optical fiber. The goal of WDM is to have a signal not to interfere with each other. It is usually used to make data transmission more efficiently. It has also been proven more cost effective in many applications, such as WDM network applications, broadband network application and fiber to the home (FTTH) applications and so on. According to channel spacing between neighbored wavelengths, there are two main types of WDM, including Coarse WDM (CWDM) and Dense WDM (DWDM). Though both of them belong to WDM technology, they are quite different. Then, what are the differences between them? This paper will give you the answer.

Definition of CWDM

CWDM is a method of combining multiple signals on laser beams at various wavelengths for transmission along fiber optic cables, such that the number of channels is fewer than in DWDM but more than in standard WDM. “Course” means the channel spacing is 20nm with a working channel passband of +/-6.5nm from the wavelengths center. From 1270nm to 1610nm, there are 18 individual wavelengths separated by 20nm spacing.

Definition of DWDM

DWDM is a technology that puts data from different sources together on an optical fiber, with each signal carried at the same time on its own separate light wavelength. “Dense” refers to the very narrow channel spacing measured in Gigahertz (GHz) as opposed to nanometer (nm). DWDM typically uses channel spacing of 100GHz with a working channel passband of +/-12.5GHz from the wavelengths center. It uses 200GHz spacing essentially skipping every other channel in the DWDM grid. And it has also gone one step further using an Optical Interleaver to get down to 50GHz spacing doubling the channels’ capacity from 100GHz spacing.

CWDM vs DWDM

According to the content above, you will find some small differences between them. 16CH CWDM Module is defined by wavelengths and has wide range channel spacing. DWDM is defined by frequencies and has narrow channel spacing. What’s more, what other differences do they have?

Capacity of Data

In fiber optic network system, DWDM system could fit more than 40 different data streams in the same amount of fiber used for two data streams in a CWDM system. In some cases, CWDM system can perform many of the same tasks compared to DWDM. Despite the lower transmission of data through a CWDM system, these are still viable options for fiber optic data transmission.

Cost of Cable

CWDM system carries less data, but the cabling used to run them is less expensive and less complex. A DWDM system has much denser cabling and can carry a significantly larger amount of data, but it can be cost prohibitive, especially where there is necessary to have a large amount of cabling in an application.

Long-haul or Short-haul Transmission

DWDM system is used for a longer haul transmission through keeping the wavelengths tightly packed. It can transmit more data over a significantly larger run of cable with less interference. However, CWDM system cannot travel long distances because the wavelengths are not amplified, and therefore CWDM is limited in its functionality over longer distances. If we neeed to transmit the data over a very long range, DWDM system solution may be the best choice in terms of functionality of the data transmission as well as the lessened interference over the longer distances that the wavelengths must travel. As far as cost is concerned, when required to provide signal amplification about 100 miles (160km), CWDM system is the best solution for short runs.

According to the content above, maybe you have already understood some differences between CWDM and DWDM by the comparision of them from definition, capacity, cable cost and transmission distance etc. And here is also a figure of comparisons between CWDM and DWDM which may help you to consolidate your understanding of this paper.

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Saving Your Fibers By Using CWDM Or DWDM Multiplier

Using a WDM(Wavelength Division Multiplexing) for expanding the capacity of the fiber to carry multiple client interfaces is a highly advisable way as the physical fiber optic cabling is not cheap. As WDM widely used you must not unfamiliar with it, it is a technology that combines several streams of data/storage/video or voice protocols on the same physical fiber-optic cable, by using several wavelengths (frequencies) of light with each frequency carrying a different type of data.

Two types of WDM architecture available: Coarse Wavelength Division Multiplexing (CWDM) and Dense Wavelength Division Multiplexing (DWDM). CWDM/DWDM multiplexer and demultiplexer and OADM (Optical Add-Drop Multiplexer) are common fit in with Passive. With the use of optical amplifiers and the development of the OTN (Optical Transport Network) layer equipped with FEC (Forward Error Correction), the distance of the fiber optical communication can reach thousands of Kilometers without the need for regeneration sites.

CWDM

Each CWDM wavelength typically supports up to 2.5Gbps and can be expanded to 10Gbps support. The CWDM is limited to 16 wavelengths and is typically deployed at networks up to 80Km since optical amplifiers cannot be used due to the large spacing between channels. CWDM uses a wide spectrum and accommodates eight channels. This wide spacing of channels allows for the use of moderately priced optics, but limits capacity. CWDM is typically used for lower-cost, lower-capacity, shorter-distance applications where cost is the paramount decision criteria.

The CWDM Mux/Demux (or CWDM multiplexer/demultiplexer) is often a flexible plug-and-play network solution, which helps insurers and enterprise companies to affordably implement denote point or ring based WDM optical networks. CWDM Mux/demux is perfectly created for transport PDH, SDH / SONET, ETHERNET services over WDM, CWDM and DWDM in optical metro edge and access networks. CWDM Multiplexer Modules can be found in 4, 8 and 16 channel configurations. These modules passively multiplex the optical signal outputs from 4 too much electronic products, send on them someone optical fiber and after that de-multiplex the signals into separate, distinct signals for input into gadgets across the opposite end for your fiber optic link.

Typically CWDM solutions provide 8 wavelengths capability enabling the transport of 8 client interfaces over the same fiber. However, the relatively large separation between the CWDM wavelengths allows expansion of the CWDM network with an additional 44 wavelengths with 100GHz spacing utilizing DWDM technology, thus expanding the existing infrastructure capability and utilizing the same equipment as part of the integrated solution.

DWDM

DWDM is a technology allowing high throughput capacity over longer distances commonly ranging between 44-88 channels/wavelengths and transferring data rates from 100Mbps up to 100Gbps per wavelength.

DWDM systems pack 16 or more channels into a narrow spectrum window very near the 1550nm local attenuation minimum. Decreasing channel spacing requires the use of more precise and costly optics, but allows for significantly more scalability. Typical DWDM systems provide 1-44 channels of capacity, with some new systems, offering up to 80-160 channels. DWDM is typically used where high capacity is needed over a limited fiber resource or where it is cost prohibitive to deploy more fiber.

The DWDM multiplexer/demultiplexer Modules are made to multiplex multiple DWDM channels into one or two fibers. Based on type CWDM Mux/Demux unit, with optional expansion, can transmit and receive as much as 4, 8, 16 or 32 connections of various standards, data rates or protocols over one single fiber optic link without disturbing one another.

Ultimately, the choice to use CWDM or DWDM is a difficult decision, first we should understand the difference between them clearly.

CWDM vs DWDM

CWDM scales to 18 distinct channels. While, DWDM scales up to 80 channels (or more), allows vastly more expansion. The main advantage of CWDM is the cost of the optics which is typically 1/3rd of the cost of the equivalent DWDM optic. CWDM products are popular in less precision optics and lower cost, less power consumption, un-cooled lasers with lower maintenance requirements. This difference in economic scale, the limited budget that many customers face, and typical initial requirements not to exceed 8 wavelengths, means that CWDM is a more popular entry point for many customers.

Buying CWDM or DWDM is driven by the number of wavelengths needed and the future growth projections. If you only need a handful of waves and use 1Gbps optics, CWDM is the way to go. If you need dozens of waves, 10Gbps speeds, DWDM is the only option.

2~18CH CWDM MUX/DEMUX Module from DK Photonics

The key components in a WDM system are the optical wavelength multiplexer (MUX), and the de-multiplexer (DEMUX). In general, a CWDM (coarse WDM) MUX/DEMUX deals with small numbers of wavelengths, typically eight, but with large spans between wavelengths (spaced typically at around 20nm). A DWDM (dense WDM) MUX/DEMUX deals with narrower wavelength spans (as small as 0.8nm, 0.4nm or even 0.2nm), and can accommodate 40, 80, or even 160 wavelengths.

The one kind of DK Photonics LGX CWDM MUX/DEMUX modules are bi-directional passive optical multiplexers and de-multiplexers, allowing multiple optical signals at different wavelengths to pass through a single optical fiber strand.

simplex-bidi-transmission-cwdm-mux-demux

The second DK Photonics ABS CWDM MUX/DEMUX modules are duplex fiber link bi-directional multiplexers and de-multiplexers, allowing multiple optical signals’ at different wavelengths to pass through duplex optical fiber.

The last one kind is simplex directional CWDM MUX only or CWDM DEMUX only. The kind of mux and demux must be used with each other.

CWDM MUX/DEMUX solution lets operators make full use of available fiber bandwidth in local loop and enterprise architectures. Our CWDM MUX/DEMUX modules split up to 18 channels (20 nm spaced) to a single fiber. The standard packages are ABS Plastic Box, 19″ Rack Mount Chassis CWDM Mux/Demux and LGX Metal Box Mux/Demux. No matter what kinds of connectors (such as FC, ST, SC, LC, etc.) are all available and we can also mix connectors on one device.

CWDM MUX+DEMUX 8 Channels (Dual Fiber) Module

DK Photonics offers a wide range of WDM (Wavelength Division Multiplexing) optical networking products that allow transport of any mix of services from 2Mbps up to 100Gbe over dark fiber and WDM networks providing for the entire set of the most demanding CWDM and DWDM network infrastructure needs.