Published on: November 25, 2019
ROADM is an optical network element used in wavelength-division multiplexing (WDM) systems to remotely enable the provisioning of wavelengths. The use of ROADMs facilitates the adding, dropping, blocking, passing, or redirecting of multiple wavelengths from the optical fiber without the need to convert the optical signals into electronic signals and back to optical again. The use of ROADMs in optical fibers provides benefits such as improved network utilization, improved network efficiency, remote, wavelength provisioning, and enables monitoring and balancing of optical power across the network. The ROADM market has been categorized to be a part of the global electronic components market. The global electronic components market comprises of companies that engage in the manufacturing of electronic components that include connected devices, electron tubes, electronic capacitors and resistors, electronic coil, printed circuit board, transformer and other inductors, signal processing technology/components, and other electronic components.
The global ROADM market was estimated to be more than USD 2 billion in 2019 and is expected to reach USD 5 billion by 2024, growing at a CAGR of more than 12% during the forecast period. By type, the WSS components dominated the global ROADMs market, predominantly due to high demand from telecommunication and data center providers. North America dominated the global ROADMs market by region. Factors such as growing demand for 5G technologies in US and high adoption of IoT technologies will drive the growth of the market in North America during the forecast period.
Many factors are expected to influence the growth of the global ROADM market during the forecast period. Our analysis identifies the following factors to be driving the growth of the global ROADM market:
There has been an increase in the demand for bandwidth-intensive services such as HDTV, video-on-demand, IPTV, and VoIP with the advancements in telecommunication. This demand is expected to increase exponentially with the increase in smartphone penetration and the advent of advanced technologies such as cloud, Internet of Things (IoT), artificial intelligence (AI), and big data. According to Cisco Visual Networking Index 2017-2022, global data traffic growth is expected to grow at a CAGR of 25% during the forecast period.
This demand for higher bandwidth will drive the market for ROADM as they provide flexible and dynamic optical networks, remote and faster service provisioning, and improved network efficiency.
ROADM components provide many advantages over traditional optical transport networks. The deployment of ROADM eliminates the need for manual intervention and simplifies network management. These components offer channel granularity to drop or add any number of channels at any site. Further, ROADMs offer accurate monitoring and dynamic balancing of signal power levels to improve overall optical network performance. Since there is no physical interaction, the use of ROADMs greatly reduces service activation times and significantly reduces service interruptions. These benefits of ROADMs reduce network complexity significantly. These factors will drive the global ROADMs market during the forecast period.
One of the major applications of ROADM components is the optical networks for data center connectivity. With the rising popularity of cloud computing, investments toward new data center construction and connectivity are on the rise to address the increasing demand and reduce latency. Over the last few years, hyperscalers have invested nearly USD 200 billion in capacity expansion and opening new data centers. For instance, in February 2019, Google announced an investment of USD 13 billion in building new data centers across the US. Such investments from hyperscalers are propelling the growth of the global data center server market.
This increase in the number of data centers will have a positive impact on the growth of the global ROADM market during the forecast period, as ROADM based networks offer better reliability, scalability, and flexibility than conventional network setups between data centers.
Meanwhile, the vendors operating in the market face numerous challenges in increasing their sales and improving profitability. Some of those challenges are:
Deployment of large-scale optical transport networks requires high capital expenditure and is time-consuming. In addition to this, ROADMs comprise different components that facilitate monitoring, balancing, and optical switching capabilities. These include the WSS, optical channel monitoring (OCM), and variable optic attenuators (VOAs). ROADMs are costlier than traditional fixed filters and hence result high deployment costs restricting their deployment only in large networks. The high deployment costs of ROADMs could negatively impact the growth of the global ROADMs market during the forecast period.
There is high variation in the ROADM networks offered by vendors, owing to which new integrations take considerable time in addition to high switching costs. This results in vendor lock-in issues for network operators. Vendor lock-in also results in lower flexibility and could give rise to interoperability issues due to the deployment of proprietary systems. This also results lack of customization and could result in slower technology upgrades. Owing to such factors, vendor lock-in issues could act as deterrent for the global RAODMs market during the forecast period.
ROADMs provide many benefits for improved network optimization; However, organizations face difficulties in deploying them owing to the complexity of deployment and the need for expertise.
The optical transport network requirements vary frequently in an organization; therefore, organizations need customized solutions. However, customization and modification in the ROADMs deployments may take time. This causes a delay in the implementation of the networks. Network operators find it challenging to integrate new ROADMs with their existing networks as functionalities in this architecture are interwoven, which could result in interoperability issues. This can also be attributed to a difference in protocols.
Further, the increase in innovation and advances in technologies have made it imperative for organizations to implement up-to-date and relevant systems. This requires professionals who are up to date with new technological features and are adept with deployment planning and technology. Therefore, organizations must either hire qualified personnel each time they want to change or invest in training current employees, both of which require substantial investments and efforts. Such limitations can hinder the acceptance of ROADMs and affect the growth of the global ROADMs market during the forecast period.
Some of the trends that are expected to influence the market during the forecast period are listed below:
Traditional ROADMs have fixed wavelengths assigned to specific add/drop ports, requiring a site visit if there is need for changing the frequency or color of a wavelength. With the colorless functionality, operators can reconfigure and enable any wavelength to be added or dropped on any port, remotely. Similarly, directionless functionality provides the capability of routing wavelengths across any viable path in the network, remotely. Further, contentionless ROADMs enables operators to add or drop the same wavelength in an add or drop structure without the need for wavelength blocking. The three functionalities together provide increased flexibility and programmability at an optical layer in order to increase speeds to sustain higher demand. CDC ROADm offers multiple benefits such as higher resilience against network failures, scalable service, and real-time system optimization. Owing to these advantages, many cloud providers are deploying CDC architectures, which will drive the global ROADMs market.
Optical transport networks hold a key role in supporting the next generation communications network, such as 5G. Major countries globally are increasingly focusing on investment toward 5G technologies, which is expected increase the bandwidth considerably, fostering the next wave of connected devices. For instance, in October 2019, Qualcomm Inc. announced the Qualcomm Ventures 5G Ecosystem Fund, through which it plans to invest nearly USD 200 million in companies in the 5G ecosystem. Similarly, in July 2017, the Ministry of Industry and Information Technology (MIIT) released a study reporting that the expenditure toward 5G by the Chinese operators will reach close to USD 45 billion 2025. Such investments toward building 5G networks will drive the deployment of advanced optical networks which will the global ROADM market during the forecast period.
The advent of IoT and M2M communication technologies have revolutionized the manufacturing industry globally. These technologies have given rise to Industry 4.0 standard, developed by the German government to promote digitalization in industrial practices. This standard refers to the integration of automation technologies and advanced techniques such as IoT with manufacturing systems. Several manufacturing companies in Europe are moving toward this standard to intensify automation to achieve higher operational efficiency and low error rates. Even the governments in Europe are promoting the adoption of industry 4.0.
IoT and M2M technologies offer significant growth opportunities in the manufacturing industry by facilitating real-time connectivity and advanced analytics. IoT and M2M, combined with ML, big data, and automation, enable manufacturing companies to adopt data-driven strategies and accelerate companies’ decision processes. However, the adoption of IoT and M2M results in a high volume of industrial data being generated. The rise in the adoption of IoT and M2M technologies and the consequent increase in the volume of data requires advanced optical transport networks, which will drive the demand for the global ROADMs market during the forecast period.
The global ROADMs market can be segmented into the following:
The global ROADMs market is moderately fragmented, with the presence of several international and regional players. We provide a detailed analysis of around 20 vendors operating in the global ROADMs market, including some of the prominent vendors such as AC Photonics Inc., Active Optical MEMS Inc., Aegis Lightwave Inc., Agiltron Inc., Cisco Systems Inc., Corning Inc., Infinera Corp., LightRiver Technologies Inc., SM Optics Srl, DuPont Photonics Technologies LLC, Finisar Corp., Fujitsu Ltd., ADVA Optical Networking, Sinclair Manufacturing Co., Lumentum Operations LLC, and Xerox Corp. Mergers and acquisitions, partnerships, and product launches are among the strategies adopted by manufacturers in the global ROADMs market.
Backed with competitive intelligence and benchmarking, our global ROADMs market research is designed to provide entry support, customer and M&A assessment, as well as go-to-market strategy support.
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