Dont believe the hype
Don`t believe the hype
Stephen M. Hardy
Editor in Chief
This month, I am writing to you from the National Fiber Optic Engineers Conference. It`s the second day of the event and I`m holed up here in my hotel room, waiting for my hearing to return. My problem? Like a lot of other folks here in Orlando, FL--and in the fiber-optics industry everywhere--the concussion caused by the collapse of the Tellabs-Ciena merger has left a ringing in my ears that undoubtedly will take a while to clear.
By now, you`ve probably seen and heard enough about what happened--unless, of course, you`re one of those conspiracy fanatics who can amuse themselves endlessly with speculation about some nefarious plot between AT&T and Lucent for the purpose of world domination. (And if you are one of these people, you may as well move on; you`ll find nothing to fuel your speculative fires here.)
Between mid-September and the time you read this, you may have drawn your own conclusions about the situation. I`ve reached one conclusion here in the immediate aftermath, as I wait for the Emergency Broadcast System signal in my head to go away: It might be useful for both the fiber-optic industry in general and those Wall Street financiers in particular, who put Ciena on a pedestal and then pulled them off, to take advantage of this period of disaster-induced deafness to make a clear-eyed examination of our market. It`s time to separate our prosperous reality from the unrealistic expectations this reality may foster. In other words, now that we can no longer hear the hype, let`s remind ourselves of what really is before us.
The Ciena situation clearly demonstrates the need for such an exercise. Like fiber optics as a whole, Ciena`s commercialization of WDM a few years ago was the right technology at the right time. And again like fiber optics as a whole, the company`s success attracted significant attention from Wall Street--in hindsight, at least in Ciena`s case, undoubtedly too much attention. Ciena is a good company with a good product line. But somehow the Wall Street traders who had bid the company`s stock to its former stratospheric levels failed to notice that while Ciena was the first to make a splash with WDM, it wasn`t the only firm working with that technology. And even with the company`s relatively big head start on its potential competitors, Ciena`s customer base consisted mainly of a small handful of major accounts. I can understand hailing Ciena as a WDM pioneer; I can`t understand the hype that sometimes made it appear to be the Microsoft of the fiber-optics world.
But I guess I do understand why the hype balloon deflated so suddenly. If you had ignored the market realities I`ve just mentioned, you too would have been surprised when Ciena "suddenly" attracted major competition that--horrors--actually stole a customer or two from them. And of course, the pack mentality that had everyone pushing Ciena upwards suddenly started running in the other direction, as if the company were never going to win another major contract again. I guess an adage for this mentality might be "once short-sighted, always short-sighted."
But the fiber-optics industry in general can`t afford to have similar short-sightedness affect the reputation of the technology or its perceived value to its users. Right now, we`re the high-bandwidth pioneers, poised to be the first to inhabit the capacity frontier. Rightly, fiber optics is being lauded for the efficiency with which it fulfills high-speed, high-capacity requirements. It justifiably is being considered for other applications where such requirements may be expected in the future. But there are competitors on the horizon, such as satellite communications and LMDS, which will battle fiber for dominance in both existing and potential future applications.
Thus, fiber can`t afford to get caught up in its own hype. Ciena`s roller-coaster ride shows that the short-term benefits of unrealistic expectations can be far outweighed by disastrous long-term effects. As happened with Ciena, there will be some competition that fiber will lose to other alternatives. The technology is strong enough to continue to prosper in such an environment as long as it controls the hype that now surrounds it. Fiber must remain more than "the flavor of the month"--for the flavor of the month changes 12 times a year.