The Future of Cloud Data Center Markets and What Passive Optical Networks Can Teach Us

Jun. 27, 2017

DCPONBlog.jpg (694828330)Cloud Data Centers are growing rapidly. One analyst’s report found that major cloud providers expect to triple infrastructure by 2020. This growth is fueled by increasing bandwidth demands but comes along with the need to reduce power consumption and control costs. As Cloud Data Centers grow, Cloud Data Center networking architecture must evolve efficiently and effectively meet the demand for bandwidth capacity while maximizing throughput speeds and lowering the average cost-per-bit. 

From Copper Cable to Passive Optical Networks (PONs) 

Passive Optical Networks (PONs) represent a significant leap forward from traditional copper cable networks. PONs offer broader reach, and faster and more secure data transfers at a lower cost. Fiber optic cables used by PONs are smaller than copper cables, require less space, and are able to carry more data. This approach reduces power consumption and lowers facilities, equipment, installation, and maintenance costs. Since PONs are easier to maintain, and fiber optic cables are physically more secure than copper cable, security is enhanced, there is reduced downtime and breakage, and the ability to withstand malicious attacks is increased. 

Applying the Lessons Learned from PONs to Cloud Data Center Infrastructure 

Cloud Data Center growth is increasing at a rapid pace. In 2014, Google spent $10 billion on building new Cloud Data Centers, and another $10 billion on maintaining existing Cloud Data Centers. As reported by The Government Accountability Office, it is estimated that the United States government spends $81 billion a year across all IT expenditures, including mission critical computing systems some of which are more than half a century old. Modernizing these systems to maximize efficiency and lower costs thus represents an enormous market opportunity for manufacturers of the technologies that help Cloud Data Center operators achieve these goals.                                            

Demand for bandwidth capacity is driven by media generation and consumption trends, including photos and videos on social media; a shift to viewing Over-the-Top content; and developing augmented reality for gaming and advertising. Bandwidth demand also comes from sources such as e-commerce, the increased collection and analysis of data across industries and institutions, the growth of data sets to petabytes in size, and the growing Internet of things (IOT). It’s no longer just computers and phones, everything from televisions to tractors are now connected to the Internet. 

PONs provide a blueprint for transforming Cloud Data Center architecture into networks that are capable of handling more data at faster data speeds and lower cost.

The Next Generation of PONs and the Future of Cloud Data Centers 

Given the nearly insatiable demand for increased connectivity and higher throughput, there is a multi-billion-dollar opportunity to provide network component solutions to Cloud Data Centers. Building on current expertise in PONs, the next generation of market-leading Cloud Data Center networking technologies such as optical networking, optical transceivers, and silicon photonics with integrated self-aligning Etched Facet Technology (EFT) lasers (SAEFT™) are being developed. 

In addition to bandwidth demands, cost considerations are also driving opportunities in providing solutions to Cloud Data Centers. Cloud Data Center operators seek to maximize speed and throughput at the lowest cost-per-bit possible. Breakthroughs in optical networking target this goal. PONs demonstrated that it is possible to meet scale and cost requirements via efficient optics technologies. Cloud Data Centers can achieve their cost, speed, and efficiency goals by applying these principles. 

Similarly, EFT technology will transform optical connectivity within Cloud Data Centers, enabling the cost efficiencies and hyper scale growth agility necessary to keep pace with an estimated five trillion gigabytes of annual Cloud Data Center traffic – a number that will continue to skyrocket as millions of new users join the cloud-connected apps economy and IoT. By leveraging technologies and solutions such as MACOM’s EFT laser technology, and L-PIC transmitters enabled by EFT and SAEFT, along with commercial scale manufacturing capability, Cloud Data Center opportunities can be capitalized on by replicating the cost structure reductions that have been achieved in Passive Optical Networks. 


All financial guidance projections referenced in this post were made as of the publication date or another historical date noted herein, and any references to such projections herein are not intended to reaffirm them as of any later date. MACOM undertakes no obligation to update any forward-looking statement or projection at any future date. This post may include information and projections derived from third-party sources concerning addressable market size and growth rates and similar general economic or industry data. MACOM has not independently verified any information and projections from third party sources incorporated herein. This post may also contain market statistics and industry data that are subject to uncertainty and are not necessarily reflective of market conditions. Although MACOM believes that these statistics and data are reasonable, they have been derived from third party sources and have not been independently verified by MACOM.