Defense not necessarily the best offense

With the telecommunications market bumping along the bottom of its current trough, many optical communications vendors are searching for new markets. Several companies tell me they've attached their hopes of safe harbor to defense and the various "homeland security" initiatives now under discussion worldwide.

At first glance, the defense market would seem like a natural place for optical technology, particularly today. The turmoil in the Middle East and North Korea promises to keep a steady stream of funding flowing to the military, particularly in the United States. An increased emphasis on security at home would seem to play to fiber's strengths, as it provides significantly greater protection from eavesdropping than copper or wireless media. Government and military agencies would also seem natural consumers of high-speed communications.

However, having come to Lightwave from a publication that covered military electronics, I caution companies to approach the defense market carefully. Washington, DC may be the capital of the United States, but unwary vendors with no experience in dealing with military culture will find the Pentagon just as foreign as any overseas customer.

For example, federal procurement regulations can make the OSMINE process seem as simple as a nursery rhyme. And speaking of certification processes, while the military has made great strides in moving toward commercial off-the-shelf (COTS) technology, those customers who require "mil-spec" hardware will not settle for NEBS compliance. As a result, you may find yourself reviewing not only your packaging but your components as well. Even if you do focus on COTS applications, you'll discover that the tradeoff for keeping away from mil-spec is an expectation of significant cost savings. Forget the apocryphal stories of $40 screwdrivers—you may find yourself discovering that metro market price points might be easier to achieve. And make no mistake about it: After you've proven your offering meets the basic requirements, it will all come down to price. Otherwise, some congressman is going to want to know why.

All that presupposes the military and government demand for optical gear will be as large as current events might lead you to believe. The bump from homeland security—provided that someone in the government figures out exactly what that is and attaches some funding to specific programs—may not be all that significant.

The search for new markets is a necessity in these difficult times. But companies should be wary that they aren't leaving the current hard road for a dead end.

Stephen M. Hardy
Editorial Director
and Associate Publisher
stephenh@pennwell.com

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