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25G Laser Shortage

August, 2014

We have been told that there is going to be a worldwide shortage of 25G lasers in the coming two years, supposedly due to not enough capacity having been planned by the industry as a whole.  We hadn’t heard anything like this before.  Do you guys know if this is true, and if so, why it happened? A couple of our contacts indicate that supply is down because of unexpected demand by a few data center operators as well as a greater need for customized optics, and that 25G lasers have inherently lower manufacturing yields than is the case, say with 10G devices. Specifically, the 25G DMLs are in short supply, not the EML devices. However, the EMLs are very expensive, especially for short-distance applications. There is also apprehension that expanding production will create a long-term overcapacity situation, once the market gets back to normal levels. In the meantime, it has become a waitin ...

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A Kaiam Strategic Partner: Google?

September, 2014

Concerning the recent $35 million announcement by Kaiam of equity funding, our intelligence indicates that one of the two strategic partners is Google. We also think the other partner is Microsoft. In addition, we believe that the total valuation is two to three times revenue -- so over $70 million. While Kaiam has clever packaging, we are not convinced that it has the lowest cost in the market. Nevertheless, the supplier has benefited from getting out there early in the data center/datacom space. It is likely that it owns the 10x10 business in that sector. Unquestionably, signs of two giant enterprise firm funding Kaiam may be about ensuring direct access to unique 100G technology. Perhaps it is the vendor’s Hybrid Mixer PLC – and/or maybe something else that could possibly be on the drawing board that involves a coherent, serial 100G device. More practically speaking, there is a higher ...

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Telecom Analytics With Bad Data?

November, 2014

On the landline side, the incumbent service providers have been notoriously lousy at record keeping. There are still in place very antiquated inventory systems along with a high level of ignorance about whether a large number of circuits are either working or connected in networks. At least with wireless technology, it has been around for a much shorter period of time, and would not be nearly as burdened with ineffective solutions in the back offices. What is the biggest reason for bandwidth on demand not taking off in a significant way after about three decades of hype? Again, it is about the lack of adequate knowledge by these carriers concerning their networks. How can executives be sure that rapid change will not adversely impact services with them all toppling on to each other? While there have been workarounds, modifications, as well as reductions in the use of Ma Bell’s Trunk Inte ...

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AT&T’s Neutrality Reply a Red Herring

November, 2014

While on the surface, it is commendable that a large player such as AT&T is taking on the US government on net neutrality, its response is totally self-serving. The carrier knows that it will make relatively little money in providing fiber to residential customers. Plus, the biggest cause of network congestion does not come from uploads and downloads to and from the home; it is about the interconnection of data centers for high-volume content. Verizon’s concentration with fiber to the home was in areas that had large enterprises nearby. It divested a lot of its other lines that did not fall into this category. Verizon saw an opportunity to disguise aggressively going after the very lucrative business customers from the regulators – and FTTB subsidized FTTH. To this day, lots of people in the industry would prefer to believe Verizon was just crazy to do so much FTTH, especially several ye ...

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New M&A Types of Players In Optics

November, 2014

In recent weeks, there has been a flurry of acquisition activity with three optical component companies being purchased by non-traditional kinds of acquirers, particularly players in the short distance, communications market including data centers. These buyers, such as Huber+Suhner and its takeover of Cube Optics, are definitely concerned about an adequate supply of componentry being available. Evidently, even big enterprises with large data centers have the same types of worries as they are also investing in optical device development, as pointed out in a previous blog article. M/A-COM bought BinOptics at the premium price of $230 million (probably four to five times revenue) to ensure adequate access to laser semiconductors. The bottleneck created by Avago Technologies' pickup of CyOptics last year was a significant catalyst. In the past, JDSU and Finisar had a major role in such M&A ...

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