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The Rise of Optical Data Center Networks

An Infonetics Research / IHS Webinar Co-produced with Infinera

#OpticalDCI

This Webinar Will Begin Shortly

The Rise of Optical Data Center Networks

An Infonetics Research / IHS Webinar Co-produced with Infinera

#OpticalDCI

3

Today’s Speakers

Andrew Schmitt Principal Analyst, Optical

Infonetics Research / IHS

JoAnne EmeryEvent Director

Infonetics Research / IHS

(Moderator)

Dr. Stuart ElbySVP, Data Center Technology

Infinera

#OpticalDCI

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5

4

2

3

100G Is the New 10G

Evolution of Cloud Network Requirements

Why Data Center Customers Are Different

Data Center Interconnect Applications

Infinera’s Approach

6

7

Conclusion – A New Optical Market

Q&A

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#OpticalDCI

Optical WAN Capacity Deployed Per Year

‣ Optical components are the best way

to look at deployed telecom capacity

• Graph shows total transmission

capacity of long reach optical

modules shipped in a given year

• Deployed bandwidth growing

25% to 30% year over year

‣ 100G unseating the technology

workhorse of the past decade – 10G

• Requires 100G costs to drop at least

20%–30% per year

• Requires new technology and

approaches to hit this cost target © Infonetics Research, October 2014

10G/40G/100G Optical Transceivers Market Size & Forecasts

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100G Is the New 10G

6

‣ 10G fades but remains half of

new deployments in 2017

‣ 100G rises by 5x

‣ 400G is really 100G/200G

technology used in parallel

• Interest in 200G isolated to only

two respondents

“Operators: Estimate the % each speed will be of

new wavelengths installed”

Metro Wavelength (<600km) Deployments

© Infonetics Research, September 2014, 100G Deployment Strategies: Global Service Provider Survey

Data Centers Are the Catalyst for Metro 100G

Service providers see DCs and ICPs

as the big driver for metro 100G

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© Infonetics Research, September 2014

100G Deployment Strategies: Global Service Provider Survey

(0 = Strongly Disagree, 6 = Strongly Agree)

3.5

3.6

3.8

4.9

5.1

5.2

5.5

0.0 1.0 2.0 3.0 4.0 5.0 6.0

Flexible coherent modulationis important enough for the metro

that we will pay a premium

The right products and technologyare not yet available

Cost of metro 100G is competitive with 10G

100G will be used mostly to carry10G and address fiber exhaust issues

We are waiting until 100G metropricing drops further before we begin

large scale deployments

We need to transport 100GE interfacesfrom our own switches/routers

Data centers and Internet contentproviders are the major customers

for metro 100G

Average Response

10

0G

in

Me

tro

Ap

plic

ati

on

s

The near term opportunity is for using

100G to carry 10G more economically

Vendors need to address costs for

large scale deployments to take place

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5

4

2

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100G Is the New 10G

Evolution of Cloud Network Requirements

Why Data Center Customers Are Different

Data Center Interconnect Applications

Infinera’s Approach

6

7

Conclusion – A New Optical Market

Q&A

8

#OpticalDCI

Evolution of the Cloud: Past

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PE

Routers

Data Center

Optical

Transport

DC Fabric

vSwitch

V

MV

MV

M

V

MV

MV

M

Data Centers

Customers

Common Network used for Customer Connection and Data Center Interconnect

Early cloud deployments leveraged the Internet for reaching

customers and interconnecting data centers

The Internet

Evolution of the Cloud: Present

PE

Routers

Data Center

DC SDN

Platform

Optical

TransportDC Fabric

vSwitch

V

MV

MV

M

V

MV

MV

M

CustomersThe Internet

Explosive growth in social networking & machine-to-machine (M2M) traffic

force larger connections directly between data centers

Emergence of Dedicated Connectivity for Data Centers

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Data Centers

Data Center

Interconnect

Today’s Cloud: Interconnected Data Centers Long Haul & Metro

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Mega data centers around the world

Cloud Exchange

Network Operators

Metro Aggregation

Long Haul DCI

Metro Data Centers

Dynamics Driving Change in Cloud Infrastructure

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‣ New players, big spenders

• Greenfield advantage

• No holdbacks from legacy OSS

• Focus on innovation, speed, performance

‣ Telcos: forced to respond

• AT&T Domain 2.0 – cloud-based

architecture

• Verizon acquisition of Terremark

• CenturyLink acquires Savvis

Source: ISI Group Report on Hyper-scale Capex Trends, Feb 2014

Tier 1 Telco Spend

$90K

$80K

$70K

$60K

$50K

$40K

$30K

$20K

$10K

$0

CY09 CY10 CY11 CY12 CY13 CY14E CY15E CY16E CY17E

IT Hardware & Data Networking – Feb 19,2014 Technology Research

Big 7 ICP Spend

Tier 1 Telco SpendTop North American Carriers

Big 7 ICP SpendThe “Big 7” Hyper-scale Players

$M

IL

‣ 5X 100G metro wavelengths over

the next 4 years: 65% CAGR per

Infonetics Research

‣ Long haul 100G growing at over 25% CAGR

‣ DCI market expected to exceed

$1.0 billion by 2017

Data Center Interconnection Growth

13

Source: Infinera, February 2015

‣ Cloud needs fast innovation

• Technology is a tool to drive price down

• Leveraging Moore’s Law is a necessity

‣ Speed to Market is essential

• ICPs will sacrifice features for speed

• Operational simplicity is paramount

This Is a Market Truly Driven by Fast InnovationC

ost

$/G

b

S

ale

s P

rice

The Innovation Gap

Need to shrink the innovation gap

Time to Market –

Innovation Gap

t=time

Moore’s law

expectation

Innovation

Reality

Profit

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1

5

4

2

3

100G Is the New 10G

Evolution of Cloud Network Requirements

Why Data Center Customers Are Different

Data Center Interconnect Applications

Infinera’s Approach

6

7

Conclusion – A New Optical Market

Q&A

15

#OpticalDCI

Data Centers vs. Traditional Carriers

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• Revenue comes from transporting bits

• Equipment flexibility is paramount

• Reliability and SLAs drive network design

• Fiber assets are owned, not scarce

• Vendor supplied control planes and

limited interoperability

• Revenue comes from applications and

content; transport is a cost center

• Cost per port; flexibility not important

• Cost and capacity requirements plus real

estate constraints drive network design

• Fiber assets are leased, not owned

• Open source, open vendor, software-

defined networks (SDN)

Two Different Markets Already Exist

17

© Infonetics Research, 2012 and 2013

40G/100G and ROADM Deployment Strategies: Global Service Provider Survey

What % of your 100G coherent wavelengths were metro (<600km)

in 2014? What do you expect in 2017?

‣ Some service providers already

deployed metro 100G aggressively

during 2014

• Competitive providers focused on

enterprise and data center

interconnect applications

• Networks still metro heavy in 2017

‣ This market needs a purpose built

metro solution, not repurposed

long-haul equipment

Key Platform Requirements

• Integration with

legacy systems

• Siloed operations and

engineering teams

• Multi-service support

• Backwards/legacy

compatible

• Telco compliance, e.g.,

NEBS, ETSI

Metro Aggregation

Decision Factors

OSS

• Simple and fast integration

with DC systems

• Support for DevOps

• Single-service

(VLAN, IP, etc.)

• Density (Gbps/RU)

• Power efficiency

(Watts/Gbps)

• Simple capacity growth:

Rack and Stack

DCI

Decision Factors

DC Systems

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1

5

4

2

3

100G Is the New 10G

Evolution of Cloud Network Requirements

Why Data Center Customers Are Different

Data Center Interconnect Applications

Infinera’s Approach

6

7

Conclusion – A New Optical Market

Q&A

19

#OpticalDCI

DCI Deployment Example

Data Center

Switch

Rack & Stack

Optical Transport

WDM Mux/Demux

10 GE

DC

LAN

100s of Gbps WDM

Data Center

Terabits per second fiber

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1

5

4

2

3

100G Is the New 10G

Evolution of Cloud Network Requirements

Why Data Center Customers Are Different

Data Center Interconnect Applications

Infinera’s Approach

6

7

Conclusion – A New Optical Market

Q&A

21

#OpticalDCI

Cloud Xpress - A Purpose Built DCI Platform

• 1Tb/s input and output in 2 RU

• 500G PIC based super-channel line side

• 500G client w/mix of 10/40/100 GE

• Instant Bandwidth™

Cloud Xpress Metro Platform

Simple Operation• Simple 1-2-3 step provisioning

• Server-like operational experience

Power Efficiency• ~100W per 100G: ALL

INCLUSIVE

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Hyper-Scale Density• 2RU (500Gbps / RU)

• Rack & Stack growth

1

5

4

2

3

100G Is the New 10G

Evolution of Cloud Network Requirements

Why Data Center Customers Are Different

Data Center Interconnect Applications

Infinera’s Approach

6

7

Conclusion – A New Optical Market

Q&A

23

#OpticalDCI

Data Center Networks Disrupt the Supply Chain

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• 10G is the workhorse technology

• Metro and data center applications addressed

by re-purposed and re-priced long-haul

technology and hardware

• 100G coherent costs limited by traditional

discrete component technology

• Balkanized networks with proprietary

management solutions

• 100G coherent rapidly becoming the

workhorse technology for all customers

• Vendors offer purpose built equipment

for the unique needs of metro and data

center customers

• Silicon photonics and InP allow photonic

integration and cut costs by 20%–30% per

annum

• Multi-vendor, open source, and multi-layer

management and control

1

5

4

2

3

100G Is the New 10G

Evolution of Cloud Network Requirements

Why Data Center Customers Are Different

Data Center Interconnect Applications

Infinera’s Approach

6

7

Conclusion – A New Optical Market

Q&A

25

#OpticalDCI

26

Audience Q&A #OpticalDCI

Andrew Schmitt Principal Analyst, Optical

andrew.schmitt@ihs.com

Infonetics Research / IHS

JoAnne EmeryEvent Director

joanne.emery@ihs.com

Infonetics Research / IHS

(Moderator)

Dr. Stuart ElbySVP, Data Center Technology

selby@infinera.com

Infinera

Thank YouThis webcast will be available on-demand for 90 days.

For additional Infonetics/IHS events, visit: https://www.infonetics.com/infonetics-events/

Follow us on Twitter at @infonetics and @infoneticsevent

#OpticalDCI