New CIR Reports Forecast the Opportunities in the Optical and Electronic Transmission Components Space
Posted on: Monday, 24 May 2004, 06:00 CDT
CHARLOTTESVILLE, Va., May 24 /PRNewswire/ -- The market for optical and electronic transmission components will grow from just over $1 billion in 2003 to $1.6 billion in 2008, according to two new reports from Communications Industry Researchers, (CIR) an industry analyst firm based here.
In "Optical Transmission Components Forecasts and Market Share Analysis," CIR claims that opportunities in the optical networking business are shifting from the public network to the enterprise. For example, according to the report, worldwide sales of lasers, detectors and other components for Ethernet and Fibre Channel -- both primarily enterprise protocols -- will be worth almost seven times that of SONET/SDH components, which are used mostly for public network equipment.
Unlike service providers whose networks are the source of their revenue, enterprise customers tend to view their networks as cost centers and as such are concerned with productivity, cost per user and the total cost of communications. As a result, the market for enterprise equipment and the components that go into them is especially price sensitive.
In this environment, components manufacturers rely on two strategies: (1) economies of scale to gain cost advantages and (2) elimination of competition. This helps explain the continued consolidation in the industry, with the acquisition of Infineon's optical operations by Finisar as a good example of this transformation. However, CIR's new report also points out that cost sensitivity is driving innovation from improved VCSELs to quantum dot lasers.
In "Electronic Transmission Components Forecasts and Market Share Analysis," CIR analyzes and forecasts the market for electronic transmission components. In this sector, Ethernet and Fibre Channel comprise more than 90 percent of the market. And while there is always room for cost improvements in manufacturing and supply chain management, CIR believes that the biggest rewards will go to those who can successfully change from making only Layer 1 and Layer 2 products, to embodying in their products the higher layer protocols that network managers will rely on as they re-architect their networks for the latest security, mobility and VoIP applications. According to CIR, future products with potential will include, for example, PHY/MAC combos that also support the latest encryption protocols.
It is with such products that chip companies will be able to create protectable intellectual property and, consequently, high-margin products. This trend is attracting new entrants into the market place, some of whom could pose a viable threat to the established players in this market -- especially Marvell and Broadcom -- which derive the bulk of their revenue from Layer 1 and Layer 2 products.
The two CIR reports contain highly detailed forecasts of optical and electronic transmission components, with breakouts by reach, speed, component type and technology platform, as appropriate. For CIR's transmission module forecasts see its recently published report: "Transmission Module Forecasts and Market Share Analysis." All forecasts are drawn from CIR's Communications Infrastructure model that provides complete coverage of the supply chain for broadband and optical networking systems, modules, components and chips. Forecasts for these reports cover six key environments -- Ethernet, Fibre Channel, SONET/SDH, ATM, WDM and PONs. Additional information about the reports can be found on the firm's web site at http://www.cir-inc.com/.
About CIR
CIR is a leading industry analyst firm specializing in the areas of communications and data networking systems, modules, components and chips. Through its reports, market advisory services and custom client engagements, CIR provides insightful research, analysis and consulting services for its clients and the industry at large.
CIR
CONTACT: Robert Nolan of CIR, +1-804-360-3403, or rob@cir-inc.com
Web site: http://www.cir-inc.com/
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