The worldwide market for Ethernet switching components is expected to reach more than $1.7 billion by 2006, driven primarily by the growth of optical Ethernet, claims a new report from industry analyst Communications Industry Researchers Inc. (CIR-Charlottesville, VA). CIR also predicts that the transceiver market "is poised to consolidate very quickly in the next 12-18 months" and will most likely be dominated by industry leaders Agilent Technologies and Finisar.

Although literally dozens of Ethernet transceiver suppliers exist today, CIR predicts that pricing wars and a slow adoption of optical Ethernet in the public network will leave room for fewer than 10 suppliers in the near future.

Agilent should come to the forefront of this market, thanks to its vertical integration strategy and aggressive pricing. The company is well positioned in terms of customer relationships for the 10-Gigabit Ethernet market as well. Finisar is also strong in terms of technology development and customer service capabilities. Other companies to watch include JDS Uniphase (thanks to its recent acquisition of IBM's transceiver business), Intel, OpNext, and Luminent. CIR analysts are less optimistic about the opportunities for Infineon, Agere, Blaze Network Products, and Nortel's HPOCS division.

Despite the heavy hype for Ethernet in 2001, CIR contends that the majority of installations will run in lower-margin copper applications. Whatever portion of the market is optical will remain predominantly in the 1.25-Gbit range, claims the report. The RBOCs that dominate the public network are only just starting to look at Ethernet. Fiber penetration to customers, a key requirement for optical Ethernet, also remains low. CIR believes that Yipes, Cogent, and XO Communications will not be viable long-term businesses.

For more information or to purchase a copy of CIR's report, "Optical Ethernet: A Market Analysis of Gigabit and 10-Gigabit Ethernet Transceivers," call 434-984-0245 or visit the company's Website, www.cir-inc.com.