June 29, 2017

LightCounting releases Mega Datacenter Optics report, which analyses impact of Cloud companies on the market for AOCs/EOMs, Ethernet and DWDM optics

Alibaba, Baidu and Tencent operate a distributed network of datacenters in many metro areas because of restrictions on building larger facilities in China. Mega datacenters operated by the Western Cloud companies are starting to transform into metro-regional clusters as their strategies evolve. Interconnecting these distributed facilities will require a lot of bandwidth. Detailed analysis of this emerging market is presented in the updated Mega Datacenter Optics report.

Amazon recently disclosed that it operates 25 datacenters interconnected with 3500 fibers in Ashburn, VA. Facebook expanded their mega datacenters by constructing new facilities in vicinity of the existing ones. Microsoft announced their intention to build more metro and regional datacenters to reduce the time required for planning new facilities.

Majority of these facilities will be interconnected with DWDM technology further expanding market opportunity for suppliers of Datacenter Interconnect (DCI) equipment to the Cloud companies. These customers will be among early adopters of 200G and 400G DWDM technology, as illustrated in the Figure below.

LT_062917.png

Will the Cloud companies take a step further and invest in building edge datacenters to reach closer to the end users?

Cisco recently introduced a new term: “Fog computing”, referring to adding compute and storage capabilities in facilities located closer to enterprises in order to facilitate migration of their private datacenters to the Cloud. Equinix and other colocation providers are doing robust business with enterprises customers migrating to the Cloud.

Cloud companies are also starting to use colocation datacenters to reach closer to the end user. Storing copies of popular videos (often referred to as caching) in local datacenters or the central offices of service providers was necessary to deal with the rapid growth of video on demand. New applications such as SnapChat and Instagram add an urgency to supporting these applications locally to ease the burden on long haul networks. Future applications like self-driving cars and other Internet of Things (IoT) novelties will have to rely on edge datacenters for low latency.

Edge-centric content distribution represents a disruption to the traditional geography of data centers which used to focus only on major markets with high urban populations and network exchanges. Mega Datacenter Optics report offers a detailed review of this transition.

This report also analyzes the impact of Mega Datacenters on the market for Ethernet optical transceivers, DWDM optics, Active Optical Cables (AOCs) and Embedded Optical Modules (EOMs).  It leverages extensive historical data on shipments of these products, combined with market analyst research, to make projections for the market in 2017-2022. The report offers a comprehensive forecast for more than 50 product categories, including 10GbE, 40GbE, 100GbE, 200GbE and 400GbE transceivers, sorted by reach and form factors. It provides historical shipments data and projections for 2.5G, 10G, 100G, 200G, 400G DWDM ports and several types of AOCs/EOMs.

3D Sensing for Self-Driving Cars Reaches the Peak of Inflated Expectations

LightCounting releases a new report addressing illumination in smartphones and automotive lidarIn 2019, the market for VCSEL (vertical cavity surface-emitting laser) illumination in smartphones will exceed $1.0 billion – now nearly triple the size of the market for communications VCSELs. That’s quite remarkable for a market that didn’t exist three years ago.3D sensing in smartphones felt like an overnight sensation, but the technology foundations were laid down years ago with Microsoft’s Kinect – a motion-sensing peripheral for gamers released in 2010 but discontinued in 2017 after lackluster sales. Lumentum supplied lasers to the Kinect almost a decade before the iPhone opportunity emerged; the company was ready to profit from the iPhone X opportunity when Apple decided to launch 3D sensing for facial recognition in September 2017.

Figure: 3D depth-sensing meets the Gartner Hype Cycle

3D Sensing

Source: Gartner with edits by LightCounting

If all technologies follow the Gartner Hype Cycle, shown in the Figure above, then 3D sensing in smartphones is now moving up the slope of enlightenment. Android brands raced to add 3D sensing to their flagship phones in 2018 – the Xiaomi Mi8 Explorer and Oppo Find X phones were first – although these only sold in single digit million quantities. Huawei also brought out new phones with 3D sensing, but the ongoing U.S. export ban on the Chinese company must be hurting the company’s traction outside China. Apple continues to dominate the market as all new iPhones released by Apple since 2017 have included 3D sensing on the front of the phone. Apple is expected to introduce 3D sensing for ‘world-facing’ applications in 2020, which adds another laser chip to every phone.

Last year illumination for lidars were not included in our market forecast since LightCounting considered it unlikely that lidar would penetrate the consumer market to any great extent over the forecast period. All indicators now point to a market for lidar illumination ramping up in 2022 and beyond. Optical components firms are now shipping prototypes and samples of VCSELs, edge emitters and coherent lasers to customers developing next-generation lidar systems – many of them building on their expertise in illumination for optical communications and smartphones.

As was the case with smartphones, the foundations for lidar technology were laid down much earlier – in this case with the DARPA Challenge 2007, where the winning vehicle used a 64-laser lidar system from Velodyne Acoustics (now Velodyne Lidar). Lidar is considered by the majority of the industry to be an essential part of the sensor suite required for autonomous driving, helping the vehicle to navigate through the environment and detect obstacles in its path. The first commercial deployments have begun. In Germany, lidar on the Audi A8 enables the car to drive itself for limited periods under specific conditions. In Phoenix, Arizona, you can hail a ride in a Waymo robotaxi.

Investor enthusiasm for lidar is undeniable with nearly half a billion dollars invested in lidar start-ups in 2019 according to our analysis of publicly available investment data. Notable deals include $60 million for U.S. company Ouster in March, Israel’s Innoviz Technologies Series C round of $132 million in the same month, and $100 million for U.S.-based Luminar Technologies in July. Interestingly, these examples illustrate the variety of lidar approaches: each company is building a different type of lidar based on a different wavelength: 850nm for Ouster, 905nm for Innoviz and 1550nm in the case of Luminar. There’s an open technology battle and they can’t all be winners.

The automotive lidar market seems to be close to the peak of ‘inflated expectations’. It’s easy to understand why. The automotive industry is enormous, with nearly 100 million vehicles (including trucks) produced annually. Players like Baidu, GM Cruise and Waymo are backed by deep corporate pockets, and new entrants like Aurora and Pony.ai are attracting hundreds of millions in investment. Intel’s $15.3 billion purchase of Mobileye in 2017 was also directed at autonomous driving. Sensor company AMS is in a $4.8 billion battle to acquire German semiconductor lighting firm Osram with its eye firmly on lidar.

However, signs indicate that the descent into the trough of disillusionment could have already begun. Waymo has yet to roll out its robotaxi services more widely – and this summer admitted that its vehicles needed more testing in the rain. GM Cruise has delayed launch of commercial services for self-driving cars beyond 2019 and is reluctant to commit to a new timescale, with its CEO Dan Ammann observing that safety is paramount; automotive is not an industry where you can “move fast and break things” he said. A casualty of the slow pace was optical phased array lidar developer Oryx Vision, which closed its doors in August and started to hand money back to investors.

While lidar is being deployed commercially today, prices are not conducive to mass production, and there are open questions around regulation, safety, ethics and consumer acceptance. Do local laws prohibit self-driving cars? Will they really be safer than humans? Who is responsible for a crash? LightCounting remains skeptical about the pace of adoption of autonomous vehicles, but will be watching the market closely and with optimism.

More information on the report is available at: https://www.lightcounting.com/Sensing.cfm.


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