Laser materials and components market to grow through 2003

May 1, 1998

Laser materials and components market to grow through 2003

New applications of laser technology have opened the market and created an upturn in sales expected to continue through 2003, according to an analytical study compiled by Business Communications Co. Inc. (Norwalk, CT). One area forecast to see an increase in sales is the telecommunications market.

The United States military has cut many of its laser research projects, but laser manufacturers are now targeting the industrial sector. According to rgb-179r, Growing Markets for Laser Materials and Components, the U.S. market for laser materials and components stands at $782.7 million and is projected to grow at an average annual rate of 10.9% to reach $1.3 billion by 2003 (see table). The United States accounts for 50% of the world market.

The area expected to experience the most rapid growth over the next five years, according to the report, is the diode-laser components sector, which includes laser diodes and diode-laser optics. Laser equipment, including power supplies and cooling systems, along with optical components such as lenses, mirrors, and prisms, are forecast to show fairly rapid gains in sales as well.

While the study notes that diode-laser components will lead the market in sales over the next five years, the segment for optical components will experience the most active growth. The diode-laser components sector is valued at $237.5 million for 1998 and is projected to increase to $480.1 million in 2003, reflecting an average annual growth rate of 15.1%. The optical components sector is valued at $226.4 million for 1998, and is predicted to increase to $349 million in 2003, reflecting a 9% growth rate.

The report concludes that sales will increase for laser equipment, materials, and instruments. Laser equipment, valued at $177.8 million for 1998, is expected to grow 9.1% to $275.4 million by 2003. Laser materials are expected to increase 8.7%, from $79.1 million in 1998 to $120.2 million in 2003. Laser instruments are projected to show the slowest rate of growth, from $61.9 million for 1998 to $87.1 million by 2003, an annual growth rate of 7.1%.

For more information or a copy of the $2950 report contact: Business Communications Co. Inc., 25 Van Zant St., Norwalk, CT 06855; tel: (203) 853-4266; fax: (203) 853-0348; e-mail: [email protected]

Fiber-optic equipment spending totals $9 billion in 1997

U.S. spending on fiber-optic equipment increased 19% in one year to reach $9 billion in 1997, according to a report by the Telecommunications Industry Association and MultiMedia Telecommunications Association (mmta). The report, 1998 MultiMedia Telecommunications Market Review and Forecast, predicts U.S. spending on fiber equipment will reach $11.7 billion by 2001.

The growth in the fiber market is attributed to telecommunications carriers increasing their fiber deployment to meet growing bandwidth demands. Additionally, the emergence of multimedia applications such as videoconferencing, interactive television, and video-on-demand are among the developments requiring fiber for increased bandwidth.

The report contains the following highlights for the fiber market:

In 1997, for the first time, fiber installa-

tion by cable-TV system operators exceeded that of the regional Bell operating companies (rbocs). Fiber installation for cable TV was 3.4 million fiber-km, up 13.5% from 1996, and is expected to increase through 2000.

Fiber spending by interexchange carriers

increased 65.6% between 1996 and 1997. As the fiber rollouts are completed, the rate of new fiber installation will decline, and decreases in installation rates are anticipated over the rest of the decade.

The fiber installation rates of the rbocs

are expected to increase into 2000, primarily driven by the demand for fiber-in-the-loop capability. The rbocs are projected to install 4.7 million fiber-km by 2001.

Competitive access providers and com-

petitive local exchange carriers are building fiber-optic rings to provide access and local services primarily to serve business customers. Fiber construction by both groups ran at about 975,000 fiber-km in 1997, up from 550,000 in 1995. Going forward, networks will be added in smaller cities, requiring less fiber than metropolitan area networks, so fiber construction by these groups is expected to decline.

Growth in the fiber market occurred even

though there was no significant increase in new facilities-based competition.

Factors hindering growth include the high cost of fiber and the emergence of less expensive copper-based alternatives, such as Fast Ethernet, which confine fiber to the network backbone. Costs for copper-based alternatives have fallen faster than costs for fiber solutions. Despite technologies that bring down the cost of fiber-optic transceivers for the backbone, such as vertical-cavity surface-emitting lasers (vcsels), fiber installations remain 20% to 50% more expensive than copper installations.

Additionally, in a growing trend, carriers are upgrading their networks through use of high-performance transmission techniques such as wavelength-division multiplexing (wdm), to increase capacity on previously installed fiber, according to the report.

Although spending on fiber-optic equipment expanded at double-digit rates in the 1990s, the report predicts that growth will slow over the latter part of the decade.

For more information or to order the publication, call (703) 907-7471 or e-mail [email protected]. u

sonet to show double-digit growth and price drop in next five years

The global market for Synchronous Optical Network (sonet) technology will grow at 17.4% compounded annually over the next five years, from $2.8 billion in 1997 to about $6.3 billion by 2002, according to a market report by The Insight Research Corp. (Parsippany, NJ). The report, sonet Transmission Systems: Telecom Backbone Networking, also predicts an annual price drop of 12% to 16% for sonet equipment through 2002.

The report explains how sonet and Synchronous Digital Hierarchy (sdh) requirements are affecting telephone carriers, their vendors, and the end customers. Most emphasis is given to the North American sonet market.

Globally, combined sonet and sdh equipment sales are forecast to grow from $4.8 billion in 1997 to $15.2 billion by 2002, with a compound annual growth rate (cagr) of over 24% between 1996 and 2002 (see figure). The report estimates the network management part of the revenue to be about $350 million in 1996, more than $1 billion by 2000, and $1.85 billion in 2002. The countries with the strongest growth, according to the report, will be the United States, China, Germany, India, Mexico, the United Kingdom, and Canada.

The report finds the sonet/sdh market is driven by the need for telecommunications carriers to reduce network costs, improve network management, add new capacity for increased volumes and higher bandwidth services, and improve network flexibility. Liberalization of the telecommunications market is loosening long-standing relationships between carriers and equipment vendors, according to the report.

The sdh market will initially be smaller than its sonet counterpart and will make up 40% of the sonet/sdh market, according to the report. The 1996 sdh market size was $1.7 billion, but sdh is expected to surpass sonet and grow to about $8.8 billion by 2002. The rest of the world, Latin America, and Europe will be the largest sdh users.

The sonet market is expected to grow from $2.4 billion in 1996, or 59% of the global sonet/sdh market, to $6.3 billion in 2002. While the cagr is 17.4% for the same period, the report predicts the market share will fall to 42% of the global market in 2002. North America will constitute about 70% of the market. According to the report, a version of sonet is popular in Japan, and the technology is used in Korea, China, other Asian countries, and Central America.

The report forecasts that sonet will enter a new stage of growth as vendors begin offering Phase 3-compliant equipment and carriers begin to see the operational benefits show up on their budgets` bottom lines. Insight`s research indicates that sonet prices are reaching parity with asynchronous equipment and will continue to decline further. It notes that the cost of developing new sonet systems remains high, which puts pressure on vendor margins. "For vendors willing to make the commitment, we expect to see healthy double-digit growth into the first years of the new century," the report says.

For more information about the 188-page $3495 report, contact The Insight Research Corp., Gatehall I, One Gatehall Drive, Parsippany, NJ 07054: tel: (973) 605-1400; fax: (973) 605-1440; e-mail: [email protected]. u

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