The research study covers the present scenario and growth prospects of the global optical transceiver market for 2016-2020. To determine the market size, the study considers revenue generated from single mode fibers and multimode fibers.
Optical fibers are flexible, thin, and susceptible to electromagnetic interference. When compared to copper wires, they are more rugged and reliable, corrosion-free, and present no fire hazard. They can carry signals over long distances with minimal breakdown. These properties have made optical fibers an industry favorite, attracting players from sectors like aerospace and defense, mining, oil, telecommunication, etc.
With rise of machine to machine (M2M) communication, internet of things (IoT) applications are generating massive amounts of data every minute. This calls for more number of data centers, which drives the demand for new optical modules that can handle the increasing bandwidth with minimal costs and power consumption. Thus, data centers are, and will continue to be the highest revenue generating end-user segment in the global industry.
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Technavio analysts highlight the following four factors that are contributing to the growth of the global optical transceiver market:
- Need for increased network bandwidth
- Growing adoption of optical wireless DAS
- Rising number of FTTx connections
- Increase in global internet traffic
Need for increased network bandwidth
With the emergence of new mobile telecommunication standards such as 4G and 5G, consumers are now opting for higher bandwidth applications and services. IT professionals and large enterprises are opting for the cloud, leading to an increase in the use of cloud services such as Microsoft Office 365, Google Apps, and SAP. This results in elevated bandwidth demand and network requirements. Technavio analysts predict a 500% increase in bandwidth demand because of the growing shift toward cloud services from 2015 to 2018.
Sunil Kumar Singh, one of the lead analysts at Technavio for embedded systems research says, “Network providers are deploying optical components, including optical transceivers and optical fibers, which deliver greater bandwidth capacity than the existing infrastructure to meet increased bandwidth requirements. Optical fiber networks have very high demand as they can help solve business requirements for a high bandwidth range.”
Growing adoption of optical wireless DAS
Network operators are adopting an infrastructure called distributed antenna system (DAS) to provide improved indoor network coverage for the increasing wireless internet traffic. DAS helps counter low signal coverage and congestion that arise when numbers of users exceed the available bandwidth.
For uninterrupted network coverage, better voice quality, and higher data throughputs, DAS with optical fibers is the best framework for providing indoor cellular networks such as 3G and LTE. Therefore, with the increasing demand for DAS with optical fibers, the demand for optical transceivers to convert electric signals into optical signals and vice versa is also increasing.
Rising number of FTTx connections
Newly developed network architectures, or FTTx, which stands for "fiber to the x," help reduce the installation price for high bandwidth services to the home. A fiber to the home (FTTH) network uses fiber optic cable instead of copper, telephone, or cable wires to deliver high-speed service to the home. Currently, fiber optic technology utilizes light instead of electricity for relaying IP packets to provide two-way transmission speed of up to 100 Mbps.
The biggest advantage of this relatively new method is that it provides the end-users with a much higher bandwidth which enables more robust video streaming, internet, and voice services. Thus, the emergence of high-speed FTTH service will raise the demand for fiber optics and fiber optic cables, which will subsequently generate demand for optical transceivers as they are used in bi-directional data transmission in a single fiber.
Increase in global internet traffic
Analysts at Technavio have estimated that the global IP traffic will grow at a CAGR of 26% during the forecast period. Mobile data traffic will grow at the rate of 75% for the next three years. Video data traffic will contribute 70% of the overall data traffic by 2020. IP networks will carry 5.8 exabytes per day in 2020 compared with 2.2 exabytes per day in 2015. The major factors leading to this increase in global IP traffic are high-bandwidth applications, fast broadband speeds, growing online video content, mobile Internet users, and proliferation of connected devices.
Sunil says, “to support this high volume of data, network operators are upgrading their networks and deploying optical technologies, including optical transceivers, to keep up with the rising demand. This has led to a greater adoption and rise in sales of optic fiber cables due to which there is demand for optical transceivers, leading to the growth of the market.”
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