Optical components - an industry report

The weather at this week's ECOC, held at the French resort of Cannes, reflected the recent fortunes of the optical component industry: it started stunningly bright (1999 to 2000), suffered a prolonged torrential downpour (till 2003), before returning to clear blue skies.

The "clear blue skies" assessment may raise some eyebrows but the good news is that since 3Q 2003, the component industry has experienced growth. "It is now a U.S. $3.4 billion dollar-a-year industry with 20 percent year-on-year growth," says Daryl Inniss, vice president and practice leader, communications components at Ovum RHK. The market figures include optical modules and discrete components for the wide area network, datacom, and access.

Inniss also agrees that there are still too many component companies and not enough consolidation. And yet component makers are finding it difficult to meet growing demand.

"Every supplier is at capacity or ramp-limited," says Inniss. These include components such as tunable lasers and reconfigurable optical add/drop multiplexers - used for upgrading WDM networks - as well as 10Gbit/s transceivers (XFPs) and even thin-film filters, a fundamental optical building block used to separate light paths. Component makers see the growing demand but turning up capacity takes time - six to nine months - and money, and component players are cautious. "They remember the past," says Inniss.

So what was hot at ECOC? WDM-PON, which is surprising given that the basic passive optical network (PON) flavours of Ethernet PON (EPON) and Gigabit PON (GPON) are still in their infancy.

There was also plenty of discussion about 100Gbit/s Ethernet. All recognise there will be considerable challenges before 100G is deployed, as well as concerns about how best to implement it. Will it be 10 channels at 10Gbit/s, 4 at 25G, 5 at 20G or even a 50Gbit/s symbol rate and modulation? There was even speculation that it could limit the 40Gbit/s opportunity.

Overall though ECOC was about incremental improvements rather than radical developments: many component announcements reduced power consumption or reduced cost, operated over extended temperature ranges or fitted into smaller-sized modules.

So where were the innovative products? "Why is it important to have new things?" says Sando Anoff, marketing manager for Europe at optical component company, Opnext. "Why expect revolution when it is steady evolution."

This is an industry that has not forgotten what it is like to get rained on.