While its Playstation2 game boxes sell like hotcakes, Sony Corp. (NYSE: SNE) is hoping to use technology developed for the PS2 to capture 30 percent of the optical transceiver market for LANs and WANs.

The initiative isn’t a samurai-sword-swinging, kung-fu-kicking virtual fighter, but mounting technology used in the company’s DVD, CD, and PS2 players will make the modules “significantly cheaper” than those of rivals, claims Kazuyoshi Onouchi, an assistant manager at the company’s semiconductor laser division. The modules in these consumer products include front-end technology that eliminates the need for active alignment of the laser diode (LD), photodiode (PD), ball lens, and other devices – a slow and expensive process that calls for the optical performance of the subassembly to be monitored while the position of each part is adjusted.

Kiyoshi Tanaka, a product manager at Sony’s semiconductor company, has made a sleeve that holds the focusing lens and the optical fiber into one unit and has mounted the LD and photodiode in a package. The front-end module, therefore, now contains the connector, lens, LD, PD, monitor PD, and transimpedance amplifier in a single unit. The result, he says, is a six-to-one simplification of the assembly that can be slapped together with the LD driver or the limiting amplifier using passive mounting.

“Our technology makes an all-in-one module – it suppresses manufacturing costs, it’s reliable, and it’s cost competitive,” Onouchi says.

“Sony is the world’s largest LD maker because of our optical pickups for our CD, DVD, and Playstation,” says Kenji Nagashima, general manager of Sony’s integrated device department, part of the company’s device solutions company. “We have been wanting to use this technology to build a bigger market for our LDs. Our members have researched this and the conclusion is that the optical communications area shows the biggest potential.”

Sony feels it’s a good time to muscle in because, while the Japanese market for modules is treading water, the company's market analysis predicts a 300,000 unit per month demand emerging – largely in the U.S. – from 2005, according to Nagashima. Sony wants at least 20 percent and is aiming for 30 percent of that market, he says.

So, Sony is commercializing two optical transceiver modules: a small form factor SAS-100A and a pluggable SAS-101A version, both of which can handle 1.25 Gbit/s for Gigabit Ethernet and 2.125 Gbit/s for Fibre Channel, running on the 850nm wavelength. The company started sampling both last December at ¥10,000 yen (US$82.25) per unit. And Sony will be shipping samples of 1310nm versions in the first quarter of 2004, says Tanaka.

Sony has impressive technology, but the jury’s still out on whether that’s enough to compete against existing players such as Agilent Technologies Inc. (NYSE: A), Finisar Corp. (Nasdaq: FNSR), and Infineon Technologies AG (NYSE/Frankfurt: IFX), according to Dennis Gallagher, equity research analyst at SoundView Technology Group.

“I am not at all sure how much of the value in a datacom transceiver is dictated by the alignment in the package,” he says. “Other companies have offered manufacturing efficiencies in subcomponents – e.g., LightPath Technologies Inc. [Nasdaq: LPTH] – and this has not driven enough of the total module's value to prove decisive in the end market; or the value has been fleeting.”

Gallagher has “very modest assumptions” about the 500m and shorter networking market and the price competition, and he questions why Sony should bother. Success requires a direct sales force, expensive marketing, and the level of investment and research needed to bring the product to market – which likely leads to a pretty low ROI. And, he asks, “Where does datacom fit with Sony's corporate directions? They may see these as an entrée to next-gen PON [passive optical network] transceivers – higher volume, consumer-like products – and these first products are mostly intended to get their feet wet in the market."

— Paul Kallender, special to Light Reading