State of the Optical Communications Industry

10 years after the internet bubble

September 2009
© Copyright 2009 LightCounting All material proprietary and confidential.
Industry Supply Chain as of 2009

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Industry Supply Chain as of 1999

Alcatel
Fujitsu
Lucent
Marconi
NEC
Nortel

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Profitability across the supply chain

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Sales of Optical Components by 2000

50-100 % annual growth

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2000 Forecast and Reality

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 What has gone wrong?

• Technological challenges
• Does Moore’s law really work in optics?
• Forecast issues
• What is the real traffic growth rate?
• How is it correlated with sales of optical components?
• Business model issues
• Can vendors be profitable selling commodity products into
a consolidate customer base?

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Dealing with Consolidated Customer base

Average Selling Price (ASP) declines do 10 Gbps interfaces

Cisco ASP Forecast LightCounting ASP Forecast

1000

800

600

400

200

0
2005 2006 2007 2008 2009 2010 2011

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 Changing Customer Requirements

Smaller size + Lower Power = Higher Port Density

XFP
SFP+
XENPAK & X2

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Real Data on the traffic growth

“Only” 40% annual growth,

Not 100-150% claimed in 2000!

Source: AT&T

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IP traffic Data and Forecast

Source: Cisco

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Transceiver Market Dynamics

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Application Segments: from Access to
Core Networks

Ethernet
Fibre Channel SONET/SDH

Optical Transceivers

FTTx Parallel WDM

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 Impact of FTTX on Core Network
Core network Access Network Scenario 1 Access Network Scenario 2
3,000

2,500
Utilized Bandwidth (Tbps)

2,000

1,500

1,000

500

0
2005 2006 2007 2008 2009 2010 2011 2012

Scenario 1: bandwidth utilization increases from 3% to 5% by 2012

Scenario 2: bandwidth utilization increases from 3% to 10% by 2012

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Does Moor’s law work in Optics?

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Examples of Integrated products

Source: JDSU

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Infinera: on a mission to prove Moore’s
Law in Optics

Source: Infinera

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 Thank you
• Please visit www.lightcounting.com for more information.
• LightCounting reports:
– Transceiver sales reports (every 6 months)
– Market forecast reports (every 6 months)
– State of the industry report (annual)
– Technology Review (annual)
– Special Topic Reports (e.g. Active Optical Cables to be published in
October 2009)

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Back up slides

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Role of LIGHTCOUNTING
Source of:
Survey
Survey of
of
- Accurate Market Information
Transceiver
Transceiver
- Objective Analysis Vendors
Vendors

Market
Market
Information
Information
&
&
Analysis
Analysis

Publicly
Publicly Inputs
Inputs of
of
Reported
Reported Industry
Industry
Data
Data Experts
Experts

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Tracking Quarterly Sales

© Copyright 2009 LightCounting All material proprietary and confidential. 21

Survey Format
(This represents a small portion of the total. The bi-annual
survey covers more than 150 products.)

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 Market Shares of Transceiver Vendors

Top 5 (listed alphabetically):

Avago, Excelight, Finisar, JDS Uniphase and OpNext

© Copyright 2009 LightCounting All material proprietary and confidential. 23

 Vendor Diversification

Vendor Market Share in

Market Segments A B C D E F G H I J 2006

SONET/SDH > 10%

Ethernet

Fibre Channel > 5%

WDM

FTTx > 2%

Parallel

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 Vendor Profitability

Gross Margin Q1 2005 Q2 2005 Q3 2005 Q4 2005 Q1 2006 Q2 2006 Q3 2006 Q4 2006 Q1 2007

Avanex -3% 0% 5% 7% 4% 4% 9% 19% 19%

Bookham 1% 19% 24% 27% 11% 9% 17% 15% 10%

Emcore 18% 20% 18% 18% 21% 21% 12% 16%

Finisar 24% 30% 34% 33% > 38.5% > 40% < 40%

JDS Uniphase 20% 33% 37% 30% 33% 37% 35%

Luminent OIC (MRV) 8% 16% 0% 20% 21% 19% 21% 17% 25%

OCP 34% 39% 43% 36% 35% 23% 23% 21% 19%

Oplink 26% 37% 24% 27% 30% 31% 31% 28% 26%

OpNext 23% 11% 13% 28% 29% 33% 35% 35%

Optium 29% 29%

Industry Average 15% 20% 19% 25% 25% 22% 19% 22% 21%

© Copyright 2009 LightCounting All material proprietary and confidential. 25

 LightCounting reports

• Semi-annual Transceiver sales reports

• Semi-annual Transceiver market forecast reports
• Annual State of the Industry report
• Annual Technology review report
• Focus reports and news updates

© Copyright 2009 LightCounting All material proprietary and confidential. 26

 LightCounting Customers

• Transceiver vendors
– Latest sales data, market forecast, market shares
• Networking system vendors
– State of the industry report, Market forecast, Technology review
• Communication semiconductor vendors
– Market forecast, Technology review
• Universities and start-up companies
– Market Forecast, Technology review
• Investors
– Market Forecast, State of the industry report

© Copyright 2009 LightCounting All material proprietary and confidential. 27

Methodology of Market Forecasting

• Challenges
– No one really knows the future, but everyone is planning for it.
– Beware of “Market Research”: Forecasts are often subjective
opinions of individuals or vendors, who are trying to influence the
market according to their interests.
• Solutions
– Unbiased Market Research
• LC approach
– No vested interest in the market
– Research supported equally by all transceiver vendors, their
suppliers and customers

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Forecast Model: Product Lifecycle

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Forecasting model: scaling the growth

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Total accumulative capacity ~ traffic

© Copyright 2009 LightCounting All material proprietary and confidential. 31

Capacity growth rate = traffic growth rate

© Copyright 2009 LightCounting All material proprietary and confidential. 32

Market Forecast

© Copyright 2009 LightCounting All material proprietary and confidential. 33

LightCounting New Reports and Services

• New Services
– Scalable Custom Consulting Services, Brad Smith, Snr Vice
President.
• New Reports from LightCounting
– NFOEC 2009 Comprehensive Report & Interop Report
– China Transceiver Manufacturing
– Active Optical Cables Forecast Report
– The Transition to 100Gs in the Datacenter
• What’s Next – Just Released or Next -Up
– The Annual State of the Optical Industry Report
– Transceiver Sales Report
– Transceiver Market Forecast Report

© Copyright 2009 LightCounting All material proprietary and confidential. 34

与作者联系（Contact Author)

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