OC sales will grow in 2014 following a respectable 1Q14. The market posted a 1% decline sequentially but grew 7% compared to the year-ago period. The lower 1Q14 result is due to new lower telecom prices being implemented.

Demand for 100G components for coherent transmission in WAN, datacom transceivers at 10 and 40G, and fiber-to-the-antenna transceivers is expected to continue. Traffic continues to increase, and high-speed optics being used in new applications are helping to drive the market forward.

The WAN OC segment, which includes components in telecom carriers’ core and metro networks, continues to be the largest segment and is forecasted to grow at a compound annual growth rate (CAGR) of 11% to US$7bn in 2019. Demand for 100G components and modules is a big driver for growth in WAN. We expect strong demand for pluggable coherent transceivers in 2015.

ROADMs and amplifiers posted a weak 2013, and we expect this weakness to continue in 2014. However, we do believe that the market will start to ship the colourless, directionless and contentionless ROADMs with flexible grid in 2015 and grow from there. We also expect growth from sales of Raman amplifiers, particularly at the end of the forecast period, to support longer-distance transmission for data rates beyond 100G.

Daryl Inniss, Practice Leader for Telecoms Components at Ovum, said: “Vendors have good reason to be optimistic about 2014 and beyond. Ovum believes demand for 100G metro–optimized transmission gear will begin shipments and ramp in 2015. Multiple component vendors introduced components and pluggable optics for 100G DWDM in anticipation.”

“Opportunities are also emerging in the data center for high-speed interconnects. Although the market posted a low-single-digit sequential decline in 1Q14, partly due to annual telecom price declines that take effect in the first quarter of the year, it expanded compared to the year-ago period. Ovum expects the OC market to expand 8% in 2014, in part to support continuing annual double-digit traffic growth and the infrastructure needed for cloud services.”