Optical components

You: An Essential Component

The time has come for some positive thinking about the optical components industry. It’s gone through an enormous shakeout, and now, I think, there’s a glimmer of light at the end of the tunnel.

You’re looking at some evidence of that right now. A few months ago, we at Light Reading were of two minds about staging our usual OFC Preview Site, but we’ve gone ahead and launched it today in response to encouragement from the industry.

Similarly, we had been of two minds whether to launch a “Who Makes What” report on optical components. We launched it yesterday – see Who Makes What: Optical Components 2004.

Most readers probably know what we mean by a “Who Makes What” report by now. It’s a taxonomy that divides up a market and then lists vendors in each product category. We take a first stab at it and then invite readers to propose additions and revisions. In the long run, this creates a comprehensive online directory of suppliers and products.

We’ve published quite a few “Who Makes What” reports already. Here's a list:

In each case, Heavy Reading, our research division, has followed up with a market perception survey that’s provided valuable data on what customers think of prospective suppliers.

I went through a phase of not wanting to do a “Who Makes What” report on optical components after talking to Andros Payne, a nice chap and the former CEO of Gigatera, a Swiss developer of innovative optical transmitters that was acquired (or re-absorbed by its parent) last year (see Time-Bandwidth Acquires GigaTera).

Once out of the business, Payne was depressingly outspoken about its prospects. In his view, system vendors are only likely to buy from big players with wide portfolios of products, and the market simply isn’t big enough to support more than a handful of those. Everybody else will have to make do with developing technology to sell to these players, according to Payne.

I suspect folk wildly underestimate market potential as often as they wildly overestimate it. But in the middle of a recession, Payne's painful prognosis had a ring of truth about it.

I came away from our chat thinking there wasn’t much point in creating a “Who Makes What” of optical components. System vendors wouldn’t need Light Reading to identify potential suppliers if there was only going to be a handful of them. And the idea of spending lots of effort trying to assess whether startups were still alive hardly seemed worth it, if most of them weren't going to sell direct to system vendors.

But, I've changed my mind.

For one thing, the jury's still out on who the big players will be in the optical components business – even if there are only going to be a handful of them.

Avanex Corp. (Nasdaq: AVNX) and Bookham Technology plc (Nasdaq: BKHM; London: BHM) are trying to develop portfolios that would put them on a par with JDS Uniphase Corp. (Nasdaq: JDSU; Toronto: JDU) – but how far have they got? And what about other potential players in this marketplace, such as China’s Accelink Technologies Co. Ltd. and Fiberxon Inc., or South Korea’s SK Opto-Electronics Inc. (SKOE)? (See SKOE: A Korean JDSU in the Making?)

The best way of figuring this out is to look in depth at each vendor's product portfolio. Our “Who Makes What” report make this feasible.

Similarly, our "Who Makes What" report promises to nail down the facts on whether Chinese vendors are likely to become world players in the optical components market, as some suspect.

Jacques Liu, editor of China Fiber Optics on Line, is working with Light Reading on this project to encourage all Chinese vendors to make sure they’re listed in all appropriate product categories, and to propose revisions to the taxonomy itself. Overall, the trauma undergone by the optical components industry has resulted in plenty of opportunities. Our "Who Makes What" report promises to help folk see through the confusion that's also been created, to get a better (more positive) understanding of what the future holds.

— Peter Heywood, Founding Editor, Light Reading

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