Consolidation in action

If this autumn is marking some kind of positive turning point, then the more generous souls amongst us might believe the modest activity in the aisles at ECOC last month in Rimini, Italy, says more about the choice of location than whether the industry is thrashing about in the Adriatic, treading water, or striking out for the shore.

Body-counting aside, there were three telling announcements on the show's opening day alone that say much about the long-forecasted consolidation and correction that is gathering pace. The items were Bookham Technology's acquisition of New Focus, Avanex's showing off its top-to-bottom offerings following its recent shopping trips, and Pirelli's return to manufacturing of systems, modules, and components.

Aside from the financial benefits of the New Focus deal, Bookham clearly wants to spread some of its risk beyond plain old optical communications to where there is undoubtedly more action at the moment. If (and I did say if) it is able to convincingly stitch together its new acquisition with the past year's Nortel Networks buy as well as the Marconi division of two years ago, then Bookham should be better placed to handle the growth in demand for a wider range of optical components that just might come about next year.

Avanex, incorporated since 1997 but having made its biggest splash this past year with the acquisition of what had been Alcatel Optronics (part of Corning's photonic technologies business and most recently part of Vitesse Semiconductor), is now offering multiple technologies and solutions to communications network carriers and equipment manufacturers. The now globally distributed company's portfolio includes arrayed waveguide gratings, fibre Bragg grating and filter-based wavelength multiplexers, amplifiers, lasers, lithium niobate and electro-absorptive signal modulators, photodetectors, transponders, dispersion compensation modules, micro optics products, and key passive devices. It also includes network-managed subsystems that combine the increased efficiency of integrated functionality and the advantages of a network management interface.

Jaime Reloj, Avanex's sales and product marketing vice president, says, "We have positioned the company to respond to the significant shift that has taken place in the telecommunications industry. Our acquisitions will enable us to meet customers' needs for a consolidated supplier base and for a one-stop shop for advanced and reliable optical subsystems, modules and components." Furthermore, the company believes the development of its intelligent photonic solutions is intended to meet the demand for customised subsystems with higher levels of integration.

Pirelli, meanwhile, was clearly thrilled to be repositioning itself as a "next-gen" telecoms equipment developer and supplier. Giorgio Grasso, chief executive of Pirelli Laboratories, told Lightwave Europe he had kept the EUR135-million development in "stealth mode." That marks Pirelli's first active component developments since the company sold off its components and systems activities to Corning and Cisco Systems, respectively, three years ago. The first product will be a tunable laser, which launches next month.

A pioneer in the first developments in photonics (Pirelli claims the first EDFA and first DWDM systems installed in operators' live networks), the company says it is "now on the road again and ready to play a leading role in the future of telecommunications." With a ready market on its Milan doorstep in the form of Telecom Italia, Grasso expects the new ranges, which will be expanded early next year, will generate EUR300 million in revenue over the next three years—never mind Pirelli's fibre and cable sales. "We are proud to introduce our new solutions just 18 months after Pirelli Labs was established," he notes. "The interest shown by prospective customers testifies that we are moving in the right direction with respect to flexibility, speed, and low costs for next-gen optical networks."

Drawing these three developments together under the umbrella of consolidation—and these weren't the only such announcements in Rimini—suggests that the industry may be evolving away from the culture of innumerable startups offering niche solutions to service providers and system integrators alike.

We may not be returning to the old world of the inflexible incumbent telecoms provider being served by the lumbering sole supplier, but as sure as supermarkets can suck business away from small corner shops, the one-stop shops are starting to grow in stature.

Matthew Peach
Editor-in-Chief, Lightwave Europe

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