Broadcom Corp. http://www.broadcom.com made its first move into the optical networking arena late yesterday when it announced the BCM8010, a 10-Gbit/s optical Ethernet transceiver that costs $88. The vendor, which up to now has specialized in Ethernet chips for copper wiring, says its debut marks the first time the circuitry for 10-Gbit/s MAC-layer connectivity has been shrunk onto a single CMOS (Complimentary Metal Oxide Semiconductor) chip.

"This is the most significant announcement we have made since the company went public," CEO Henry T. Nicholas III told Reuters news service yesterday.

But opinion is mixed about its significance to optical networking. Some see Broadcom's announcement as a major blow in the cause to replace Sonet with Ethernet technology in metro networks. "Broadcom is moving the industry forward by getting something out there that supports 10-gigabit Ethernet, and we think that's very important to the emerging metro market," says George Prodan, vice president of marketing for Extreme Networks Inc. http://www.extremenetworks.com.

Of course, Extreme is hardly an objective observer. It recently announced products that are designed to allow carriers to replace Sonet switches with high-speed Ethernet in metropolitan area networks, and there is some debate about the carrier-readiness of the new gear (see Extreme Launches A Sonet Killer). Prodan says he does not know whether Extreme will use the BCM8010 in its products.

Others think the announcement isn't as big a deal as Broadcom makes out. "The real interest here is the price," says Anand Parikh, founder and vice president of marketing and business development at Appian Inc. http://www.appiancom.com a vendor of metro gear (see Appian Teeters On the Edge ). "If they can support the price they're talking about, this is a very interesting announcement. Clearly, the significant cost decrease in chips could bring down the overall cost of systems."

Still, Parikh doesn't think it means the demise of Sonet networks. While carriers will benefit from using 10-Gbit/s Ethernet for all-data applications, he's sure they'll continue to use Sonet or some form of it for mixed voice and data networks far into the future. "Ten-gig will be used for data only. Sonet is not going away," Parikh says.

Of course, there's no reason why Broadcom couldn't have it both ways - by also developing Sonet chip sets. But Broadcom itself declined to comment on whether it will enter the Sonet components market or stick with the position Extreme supports.

Still, analysts think that support of Sonet is a must for the growing company. "Broadcom will eventually play in both markets [Sonet and Ethernet]," says Jeffrey K. Lipton, analyst at financial consultancy Chase H&Q Communications Technologies Group http://www.hamquist.com.

Competitors say the Broadcom chip is a drop in the bucket. "This is largely a marketing ploy," says Brent Little, vice president of marketing at Applied Micro Circuits Corp. (AMCC, http://www.amcc.com). "In fact, I'm amazed they're charging $88 for it. It means very little to just have a transceiver without any of the additional development you need to get real devices to work on the public network. This is far from that reality."

AMCC's Ganges chipset, also announced yesterday, uses packet-over-Sonet framing to support 10-Gbit/s Ethernet in Sonet networks. Nortel Networks Corp. http://www.nortelnetworks.com is using AMCC's chips in 10-Gbit/s Ethernet-over-WAN prototypes, although the vendor hasn't committed to putting them into products just yet.

And Rod Wilson, director of the 10-Gigabit Ethernet Program at Nortel, says there is room for different implementations of 10-Gbit/s Ethernet, with or without Sonet. Wilson said he is not clear on the details of Broadcom's announcement. "The word transceiver can mean lots of things," he says. "It's an aggressive announcement, but I'm not sure what it really means."

Broadcom's shares closed at 182 Tuesday, up 7.75 points from Monday's 174.25. AMCC's share price dropped from 126 yesterday to 115.25 by the end of trading Tuesday.

by Mary Jander, senior editor, Light Reading http://www.lightreading.com