JUNE 1, 2009 -- The optical transceiver industry will contract in 2009, remain flat through 2010, but gain momentum in 2011-2012, fueled by investments in networking infrastructure, according to the latest State of the Industry Report from LightCounting (search Lightwave for LightCounting). Sales of the top 10 vendors accounted for 85% in 2008, up from 79% in 2007, led by market share gains of the top three suppliers. This trend is likely to continue, as customers are unwilling to risk dealing with smaller suppliers during a recession.
The average gross margin of leading vendors remains at 25%, well below the 40-60% margins commonly maintained by optical equipment manufacturers and service providers, LightCounting reports.
Increasing profitability remains the primary objective of the optical transceiver industry, the market research firm asserts. Diversification into different market segments, customer types, and geographic regions is critical for emerging from the recession. Well-diversified vendors are likely to solidify their market positions in 2009-2010 and enjoy increasing profitability in 2011-2012, according to LightCounting.
"Doing business in the current economic environment will be difficult for all and probably impossible for some vendors," says Vladimir Kozlov, founder, LightCounting. "Those strong enough to survive will be more well-rounded, better able to reap the rewards of healthier profit margins, and more capable of serving an increasingly demanding global marketplace."
The report examines the state of the opto-electronic transceiver industry, covering industry dynamics in market segments including SONET/SDH, Ethernet, Fibre Channel, WDM, FTTx, and optical interconnects. Leading transceiver vendors shared confidential data that enabled an in-depth analysis of the industry's health, LightCounting asserts. The report reveals the profitability, industry share and diversification of transceiver vendors and their customers and key suppliers.