The U.S. market for tunable optical technologies will surpass $1.3 billion by 2005, driven by the needs of service providers and equipment manufacturers to reduce the costs associated with building, operating and maintaining networks, says a new report from Communications Industry Researchers. However, according to CIR, the next few years will present some potentially lean times for tunable components manufacturers until several hurdles are overcome.
The Opportunities
According to "Tunable Optical Components: A Technologies and Market Assessment":
* Tunable laser markets will reach $870 million in 2005 driven initially by their growing capability to offer "sparing" and eventually by other applications such as wavelength routing.
* Tunable filters will have a market potential of almost half a billion dollars in 2005 as the result of several applications, but primarily performance monitoring and wavelength selectivity.
* Tunable dispersion compensators and receivers will not however, see much of a market opportunity before 2004 as equipment manufacturers see little use for them until components manufacturers first address the issues of stability, reliability and volume production of lasers and filters.
What's the hold up?
While some manufacturers and analysts have painted rosy -- and perhaps, unrealistic -- pictures of the short-term future of tunable technologies, CIR's discussions with service providers and equipment manufacturers have made CIR more conservative:
* Service providers remain cautious about CAPEX issues. Their current focus is on maximizing current infrastructures and deferring spending on more esoteric and even risky technologies. This apparently includes tunable technologies -- for example, the carriers with whom CIR regularly speaks have expressed reservations on the stability and reliability of tunable lasers.
* Equipment manufacturers affected by the slowdowns and delays in service provider orders are still working through components inventories ordered under the assumption of better times. It will be six months to a year before they start ordering tunable component to replace the conventional products that are now piled up in their factories
* The ability to manufacture the types of technologies at price points that manufacturers and service providers would find attractive is not there. Vendors simply cannot yet ship in sufficient volume to have most tunable technology products make economic sense.
Formulas for Success
CIR believes that components manufacturers that follow certain formulas will be able to steer around such factors that retard the tunable components market. For example, CIR recommends that:
* Those companies with strong manufacturing facilities, which concentrate on producing devices such as tunable DFBs that reduce costs while integrating into existing systems' architectures will hold an advantage.
* While the major components supply companies such as Alcatel, JDS Uniphase and Corning can never be counted out, tunable start-ups with significant funding levels or supply agreements with large systems manufacturers stand a good chance of success.
* Furthermore, companies targeting the more established long-haul network segment will see results sooner than those banking on the growth of the metro market.
* Components suppliers with revenue streams from other, non-tunable products, will be able to sustain themselves far easier until the market for tunable devices emerges.
"Tunable Optical Components: A Technologies and Market Assessment" provides detailed analysis and perspectives on the market's customers, suppliers, technologies and opportunities, as well as five-year forecasts in units and ASPs for tunable lasers and filters segmented by product type. CIR conducted interviews with over 45 companies to provide the basis for its opinions and growth projections. The profiles of the vendors were written by CIR's analysts and not by the PR departments of the companies covered within the report. CIR's analysts also relied heavily upon their understanding of the systems market to provide results that readers will find credible.
About CIR:
CIR is an industry analyst firm specializing in the areas of fiber optic networking systems, software and components. CIR provides research, analysis, and consulting services for the optical market. CIR's new report is available to interested buyers at a cost of $4,500 for hard copy and may also be purchased in electronic formats. For more information, visit www.cir-inc.com.