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40 Gbps and 100 Gbps Ethernets Will Result in $4.3 Billion by 2016

The IEEE's efforts to create 40 Gbps and 100 Gbps Ethernets will result in $4.3 billion in annual revenues by 2016, according to a new report from CIR, an industry analyst firm based here. While the initial demand for the new networking speeds will come from large data and switching centers, CIR believes that the impact of these new standards will be felt throughout the network. For additional information about the report please visit www.cir-inc.com.

Findings include:

No more fighting and no more SONET: The new Ethernet standards will mark the end of the "cold war" that has existed between the data communications and telecommunications industries since the 1980s. In the future Ethernet will lead the way in terms of speed, offering the highest data rate formats available. The ITU will follow by encapsulating these formats into its own Optical Transport Network which will gradually replace SONET/SDH. This new stability in the standards making process will reduce the risk of investment in new chips and optical components needed for the next leap forward in networking to occur.

40 Gbps brings the next network nearer: The near-term potential for next- generation networks has increased considerably now that the 40 Gbps option has been introduced since it can be built with today's laser and modulation technologies and existing MSAs. There is already considerable pent up demand from power users in large data centers, high-performance computer environments and Internet exchanges who today are using 10 Gbps link aggregations (LAGs.) These users are expected to make a rapid move to 40 Gig server ports once these become available. According to CIR's new report the market for 40 Gbps Ethernet is expected to reach $3.1 billion by 2016.

It's all about servers: Although the new Ethernet standards will impact every segment of the network from long-haul to interconnect, the initial demand thrust is expected to come from servers, which will account for just over 40 percent of the 40/100 Gbps Ethernet market by 2016. Much of the current standards activity for next-gen Ethernet is being carried out with servers in mind.

Still seeking 100 Gbps: Even with 40 Gbps Ethernet, there will still be a need for 100 Gbps, especially for switch connections, which will represent half of the 100 GigE market in 2016.

Preparing for the next wave: Components and modules firms are preparing for the next wave in networking. Among the signs are (1) a new enthusiasm for InP based optical integration, (2) a proliferation of new modulation schemes, most notably the recent introduction of PolMux DPQSK, and (3) serious discussion of new MSAs, especially QSFP MSA, which CIR believes is the most likely candidate for both 40 and 100-Gig transceivers.

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