There is some confusion in the Carrier Ethernet (CE) sector. Experts agree that it is continuing to expand. The Vertical Systems Group (VSG) suggests the pace has cooled a bit, while The Dell’Oro Group found that the category has hit an all-time high.
The VSG study concluded that incumbent carrier sales grew 7 percent in the second half of last year as measured by retail ports. That, according to VSG Principal Rick Malone, was slower than during the first half. He implied that the slowdown may be a function of the increase in virtualization.
The firm found that the top four companies in its incumbent carrier leaderboard, in size order, are AT&T, Verizon, CenturyLink and Windstream.
Dell’Oro looked at the service provider router and carrier Ethernet Switch category, saying that the segment was $13 billion and that the core network CE router market beat the previous record, which was set in 2008. Senior Analyst Alam Tamboli was quoted in the release as saying that the driver was the cloud segment, and that telecom operator spending was “lackluster.”
VSG focused on carriers and Dell’Oro Group included cloud providers. It therefore is possible that the discrepancy in interpretations is due to differences in precisely what the studies measured.
In any case, the move to software-defined networks and network functions virtualization (SDN and NFV) will roil the CE segment. The highest level goal of these technologies is to use software to make networks more efficient. How effectively it does this will impact how many GE ports are sold. It will also affect the average size of those ports.
IHS Toolkit at the very end of last year released its own study, which projects that Gigabit Ethernet (Gig E) router port purchases will skew toward higher capacity. GE ports are sold in 10 Gigabits per second (Gbps), 40 Gbps and 100 Gbps increments. The study said that in 2016, 16 percent of Gig E sales were of the 100 Gbps variety. That percentage will more than double in 2018, when 38 percent will be capable of that rate of data transfer.
Networking is changing dramatically. The inherent advantages its proponents claim, which include flexibility, simplicity, speed and efficiency, suggest that CE is well positioned as the telecom and IT sectors move in this direction. The current dynamic is described by Web-Scale Networking:
The CE phenomenon is being fueled by cable operators and telecom network providers, who already have an entrenched business and consumer customer base. While previous market forecasts indicated exponential growth, analysts have revised their opinions based on more conservative growth and adoption trends. Nonetheless, there is no denying that CE is making a major impact in the Web-scale networking world and can be expected to keep evolving to keep pace with technology trends.
Insiders seem to agree that the trend line for CE is upward. There is disagreement, however, about whether that growth will be gradual or dramatic.
Carl Weinschenk covers telecom for IT Business Edge. He writes about wireless technology, disaster recovery/business continuity, cellular services, the Internet of Things, machine-to-machine communications and other emerging technologies and platforms. He also covers net neutrality and related regulatory issues. Weinschenk has written about the phone companies, cable operators and related companies for decades and is senior editor of Broadband Technology Report. He can be reached at [email protected] and via twitter at @DailyMusicBrk.