E2O Communications Inc. plans to announce Monday that it's sampling 4-Gbit/s transceivers, joining what could become a crowd of vendors preparing for 2004 production.

The company joins Infineon Technologies AG (NYSE/Frankfurt: IFX) in announcing 4-Gbit/s parts (see Infineon Samples 4-Gig FC Optics). They've gotten a jump on other likely competitors such as Agilent Technologies Inc. (NYSE: A), Finisar Corp. (Nasdaq: FNSR), and JDS Uniphase Corp. (Nasdaq: JDSU; Toronto: JDU), but so far it appears everyone will ship at around the same time.

E2O and Infineon expect volume shipments to begin in the first half of 2004. Agilent, which hasn't divulged its 4-Gbit/s plans yet, expects to be shipping around the same time, says Shuo Zhang, the company's marketing manager for enterprise optics.

The picture is less clear on the electronics side, where only PMC-Sierra Inc. (Nasdaq: PMCS) has announced 4-Gbit/s chips (see PMC-Sierra Debuts 4-Gig FC Chips). "The 4-Gbit/s Fibre Channel is not gated by the optics. It's gated by the IC industry," Zhang says.

Like Infineon, E2O is basing its transceivers on 850nm Vertical Cavity Surface Emitting Lasers (VCSELs). E2O plans to offer both small form factor pluggable (SFP) and small form factor fixed (SFF) transceivers.

Separately, E2O has been preparing a 1310nm VCSEL for some time (see VCSELs Revisit OFC). That device is nearing availability, meaning a 1310nm, 4-Gbit/s transceiver could be announced by the second quarter of 2004, says Wenbin Jiang, E2O vice president of advanced technology. Infineon, meanwhile, demonstrated its 1310nm transceiver at ECOC this week.

The 4-Gbit/s rush was fueled by the Fibre Channel Industry Association's surprise vote to standardize 4-Gbit/s storage area networks (SANs). Most SAN vendors had counted on jumping to 10 Gbit/s directly, to tap the growing pool of 10-Gbit/s Ethernet electronics and optics.

It's still possible that 4 Gbit/s will be a short-lived stopgap for companies waiting to get to 10 Gbit/s. "The move to 4 Gbit/s is only because there is some doubt that 10 Gbit/s will come soon," writes analyst Tom Hausken, of Strategies Unlimited, in an email to Light Reading.

But that might not be the case if the 4-Gbit/s price can drop to 2-Gbit/s levels, E2O's Jiang says. "You'll have even less incentive to go to 10 Gbit/s for the short reach," he says. (Long-reach applications would still be interested in 10 Gbit/s, he thinks.)

The drop in price would be a side-effect of the auto-negotiation feature that's included in the 4-Gbit/s Fibre Channel standard. This would allow a 4-Gbit/s transceiver to run at the 1- or 2-Gbit/s rate, much as Ethernet controllers can handle different speeds.

The trick will be to make the 4-Gbit/s transceiver cheap enough to compete with plain 2-Gbit/s transceivers. E2O is "very close" to that point but will continue selling 4-Gbit/s transceivers at a premium until it can bring costs down, Jiang says.

— Craig Matsumoto, Senior Editor, Light Reading