A little cant go a long way alone

Dec. 1, 1998

A little can`t go a long way alone

Stephen M. Hardy

Editor in Chief

[email protected]

Rooting for the underdog represents one of the hallmarks of sports, particularly here in the United States. Provided their favorite team isn`t playing, fans frequently find themselves in the final moments of close games supporting the supposedly undermanned squad, the team whose players have made up for their alleged lack of talent with hustle and stout play.

There are underdogs in every aspect of life, including business. In fiber optics, the smaller, specialty manufacturers come to mind. In today`s environment of corporate consolidation and optical-communications mega-companies, it seems natural to root for the continued success of niche players that may only do one thing, but that do it very well. According to most of the analysts with whom I`ve spoken recently, you should root very hard for these companies--they`re going to need all the support they can get.

The signs are everywhere that "bigger is better" when it comes to supplying future optical network needs. You`ll recall that in this space last month I reported that one analysis firm predicts smaller, specialty manufacturers of fiber-optic cabling will find their margins squeezed to the choking point next year. Earlier, I heard a vice president at a major components manufacturer say that the era of the component "cottage industry" was over and that only the companies with the financial resources to embrace advanced manufacturing technology that would enable them to deliver a wide range of products will survive.

Meanwhile, every issue of Lightwave carries at least one announcement of a merger or acquisition. Bigger companies can provide one-stop shopping for harried customers who don`t have the time or expertise to patch their networks together with equipment from several smaller firms, the common wisdom holds. Dr. Barry Flanigan, senior analyst at Ovum Inc., told me during the conversation that underpins my article on page 1 that these mergers also are becoming increasingly essential to the vendors themselves in their efforts to predict and meet future market requirements. It is no longer adequate to understand only how your cog will turn in the great network machine, he says. Manufacturers must also understand larger network issues, such as transmission protocols, optical networking, data networking, and network management. Companies with a large breadth of product--or who can acquire that breadth by scooping up other companies--will be able to maintain the "big picture" view that will become increasingly necessary as network complexity grows.

Certainly one can see the evidence of this phenomenon in some of the recently announced mergers. Networks now need to be optimized for data transport as voice communications loses its preeminent position in the traffic hierarchy to the Internet. Thus, Northern Telecom acquires Bay Networks (and changes its name to Nortel Networks), while Alcatel picks up Packet Engines.

Can smaller companies possibly survive in this environment? Yes, says Flanigan, who assures me that there will always be a place for "best of breed" niche players. (Surely these mega-companies can`t do everything perfectly.) But these smaller companies will need to find partners that can supply them with the "big picture" view that they lack. Smaller companies will have to accept a smaller role in the new market environment; they won`t be able to compete with the big boys across product categories, Flanigan states.

So we will still see niche companies running across the fiber-optics playing field like an undersized running back. But they better have some big boys blocking for them if they want to keep playing.

The sharp-eyed among you may have noticed a new name on our masthead. This month marks the Lightwave debut of Kathleen Richards, who is our new senior editor. Kathleen will spend most of her time on our Special Reports and Features and will write and solicit these articles. You`ll also find her byline on some of our news stories. Be sure to look for Kathleen at future trade shows, and feel free to give her a call to talk about future editorial opportunities or to just say "Welcome aboard."

Sponsored Recommendations

Supporting 5G with Fiber

April 12, 2023
Network operators continue their 5G coverage expansion – which means they also continue to roll out fiber to support such initiatives. The articles in this Lightwave On ...

The Pluggable Transceiver Revolution

May 30, 2024
Discover the revolution of pluggable transceivers in our upcoming webinar, where we delve into the advancements propelling 400G and 800G coherent optics. Learn how these innovations...

FTTx Deployment Strategies

March 29, 2023
Cable operators continue to deploy fiber in their networks at anincreasing rate. As fiber grows in importance, proper choices regardinghow to best fit fiber to the home together...

Advancing Data Center Interconnect

July 31, 2023
Large and hyperscale data center operators are seeing utility in Data Center Interconnect (DCI) to expand their layer two or local area networks across data centers. But the methods...