DWDM Component Market to Reach $34.6 Billion By 2009

According to a new optical communication market study by the ElectroniCast Corp., the total dense wavelength division multiplexing (DWDM) components consumption was $2.85 billion in 2000. The new ElectroniCast study presents a forecast for (only) the major DWDM components that are used in DWDM system equipment and optical add/drop multiplexers. This will expand rapidly, to over $10 billion by 2005. Growth will then continue, at a strong pace, to reach $34.6 billion by 2009. This component consumption will be led by North America, with 54 percent, or $18.7 billion dollars, by 2009 (see figure 1).

Figure 1: DWDM components global consumption value forecast, by region.

There is very strong demand for more communication bandwidth. There are several different ways to meet this demand. Using DWDM is one possible solution. The choice between solutions, or the synergistic combination of several solutions, will be made by communication service providers almost entirely on the basis of first installed cost. Secondary considerations include projected life cycle costs and flexibility for future upgrade.
Several different component technologies have advanced to the point that DWDM networks are now the clear economics-based solutions in some networks, such as undersea cable and long-haul terrestrial networks involving spans of hundreds of kilometers. As the WDM component technology continues to advance and per gigabit-kilometer costs drop, WDM increasingly will be applied to shorter distance links (see figure 2).

Figure 2: DWDM components global consumption forecast, by component type.

Optoelectronics Dominated DWDM Component Value

Although the DWDM filter module is a key element of the high-capacity fiber network, its per-channel cost is moderate when compared with the transmitter and receiver.
    "While the per-channel cost of transmitter/receiver pairs at a fixed wavelength will drop more rapidly than filter cost, there will be a strong countering trend toward deployment of higher data rate, more expensive T/Rs," according to ElectroniCast President Stephen Montgomery.
    The T/R (+ integrated optoelectronics) share of global DWDM component consumption value was 62 percent in 2000 and will be 85 percent, or $29.4 billion, in 2009. The multiwavelength transmitter set is a key element of the DWDM system.
    "The transmitter set and the DWDM filter module must provide the required number of wavelengths/channels with precise wavelength spacing between channels, very narrow optical width per channel, and extremely little drift permitted during operating and environmental conditions. The optical amplifiers and the receiver photodiodes, in contrast, are relative broadband and require less precision of control," Montgomery said.

ElectroniCast, founded in 1981, is a world leader in forecasting for the fiber optic, optoelectronic, and photonic industries. This includes technology forecasting, markets and applications forecasting, strategic planning, competitive analysis, and marketing/sales consultation. ElectroniCast, as a technology-based independent forecasting firm, meets the information needs of communication industry planners and related suppliers. Reduction of the risk of major investment decisions is the main benefit provided. The DWDM Products Global Market Forecast is available for US $12,000. Please call Theresa Hosking, Director of Marketing/Sales at 650/343-1398; fax 650/343-1698, website: www.electronicast.com; e-mail: electronicast@msn.com, to receive more detailed information.