by Stephen Hardy
Much has been said in these pages about the ups and downs endemic to the supply of optical devices, such as transceivers and transponders. But if you really want some insight into why the market is such a roller coaster, you should get your hands on our survey of transceiver and transponder purchasers. (Find out how.) The customer may always be right–but these customers, on the surface, would seem to have it all wrong.
For example, as I blogged in January, transceiver and transponder buyers aren't a particularly loyal bunch. We asked our respondents how likely they would be to change transceiver/transponder suppliers during the lifetime of a given application. Only 27.5% said they either definitely wouldn't or probably wouldn't swap vendors. Now that's an aversion to commitment.
Of course, the lack of constancy may be due to the fact that buyers sometimes have trouble telling their vendors apart. We presented our respondents with a list of 23 companies that we considered market leaders–and, we figured, with whom they would be most familiar.
We figured wrong.
Asked to rate their familiarity with the product lines of these vendors on a scale of 1 to 5–where 1 meant that the respondent was "Not at all familiar" with the company's product line and 5 indicated the respondent was "Extremely familiar" with a company's offerings–our intrepid module buyers failed to deliver average scores greater than 3.0 to more than two vendors.
But before you get the wrong idea, I can't criticize transceiver/transponder buyers for either of the two survey results–particularly for this last item.
Twenty-three vendors may seem like a lot (actually, it is), but it represents merely a sampling of the total universe of module suppliers. When you multiply the number of vendors out there by the panoply of device types at all the different bit rates called for by each of the different transport protocols, you get an inventory list it would take IBM's Watson computer to keep straight.
Similarly, the nature of module technology makes the lack of vendor loyalty understandable, as well. Applications where device technology has reached full maturity are now commodity markets; if you can find a cheaper supplier, why not switch?
At the cutting edge, it's more likely that performance will be paramount. Perhaps your initial supplier may not have its offering fully baked–or someone else has a new twist. Or maybe all the kinks have yet to be removed from your initial supplier's production line. When you're breaking into a new product area with emerging technology (like, say, 100-Gbps transport), switching to a supplier with a better module makes clear sense.
All of which makes the transceiver/transponder market the toughest niche in optical communications. And those who succeed in it some of the most remarkable companies around–both because of and in spite of their customers.