The only way is up!
Visitor numbers at OFC 2003 in March were lower than anyone in the industry could have predicted. While nobody can deny that the halls did at times resemble a ghost town, the "unofficial" attendance figure of 15,000 left many asking whether this was overly optimistic. Admittedly, the combination of the Iraq war and SARS outbreak provided some with the perfect excuse not to travel.
As the dust settles on Atlanta, GA, and as many exhibitors start to evaluate the show, a question frequently asked is, what does this year's show mean for the future of the industry? My view is that the show marked the nadir for the industry—to think things can get worse is simply too awful to contemplate.
The green shoots of recovery that had been so widely rumoured were certainly not in evidence in Atlanta with enquiries to most booths down by a minimum of 60% compared to OFC 2002 in Anaheim, CA. While many realised that visitor numbers from the height of the telecommunications boom (more than 40,000 in Anaheim in 2001) was not sustainable, it did keep morale high. The flip side of the fall in attendees in Atlanta is that the percentage of buyers with real budgets to spend, either in the short or medium term, was at least on a par with last year. It seems that the shakedown in the industry, the war, and SARS has at least reduced the number of tyre-kickers—nonessential corporate travel has been curtailed due to cost or safety.
The closure of one of the exhibit halls and the empty booths proved that the downturn continues to bite with venture capital running out and the market unable to support the number of vendors. The result, evidenced by the product lines being showcased at OFC, is many optical-fibre businesses that evolved into DWDM and telecoms companies at the height of the boom are now performing abrupt about-turns in an attempt to re-establish themselves in the defence, aerospace, and research markets. Their inability to turn on the revenue streams they abandoned not three years ago proves that the non-telecoms industry will not easily forgive and forget.
Fibercore Limited remained a speciality fibre company in the late 1990s, and we focused on consolidating our position in the defence, aerospace, and fundamental research while growing our telecoms business. Having been told by many that our future was telecoms, OFC 2003 proved to us the benefit of our single-minded focus.
The current market's bleak outlook is compounded by not only the drop in the price of fibre, but also a significant reduction in volumes being bought. In telecoms, with the exception of the Asian market, very little new fibre is shipping. Where new non-telecoms business is being won, the future potential is invariably far lower than that with which telecoms seduced us all during the boom. The pigtail of a biotech sensor may be the same length as that on an EDFA pump laser, but the total number of units will be at least an order of magnitude lower. On this basis, OFC 2003 confirmed my belief that it will take at least another two years, along with continued market share growth in all our markets, for us to get back to the financial levels of 2000.
While the U.S. and European markets contract, the growth in Asia was very evident at OFC, with many optoelectronic operations of both large telcos and boutique optical-component manufacturers now owned or located in Asia. The interest in Fibercore from Asian companies across both telecoms and non-telecoms industries at OFC 2003 reinforced our belief that success in the optical-fibre business (as opposed to simply the telecoms business) is about adopting a two-pronged approach. OFC 2003 proved that fibres are increasingly specified in the U.S. and used in offshore manufacture in Asia. Our experience has enabled us to develop new fibres that draw on the experience of high-volume production to deliver fibres to meet the demands of telecoms as the market returns.
My abiding memory will be the sale of empty OFC 2003 branded bags on day one and price reductions on days two and three—evidence, if anyone needed it, that times have continued to get tougher in telecoms over the last 12 months. The show also proved that diversification back to traditional fibre applications in aerospace, defence, and research and movements into new industrial applications will be a key to the survival of many. On the plus side, the 15-minute queues for the restrooms and lunch had disappeared along with having to book a table at a restaurant days in advance. And if you were a buyer, the exhibitors had plenty of free time to talk to you.