BLOG

Bullish on 850nm VCSELs; Avago Selling VCSEL Components

March, 2015

As we will demonstrate on an OFC 2015 panel, the data center VCSEL market will remain healthy for an extremely long time, especially in terms of steady revenues. The most shocking change is based on recent evidence that Avago Technologies is selling VCSEL components, possibly including as far down the food chain as bare die, to at least one interconnect solutions provider and at the request of a minimum of one very large enterprise. In even reading between the lines of a small portion of the transcript of the latest quarterly report from the vendor, it indicates a move in this direction: "...[W]hen you start talking about 25[G], you’re talking about having to drive short-reach or even longer reach native 25, which makes it very tough to produce laser, VCSELs, laser, so to speak, that does 25 gigabit. We are one of the few guys who can do it. And we happily sold it to guys who do 100...

Read More

Surviving in a 10G World

February, 2015

Given that the lion’s share of the discussion in telecom forums is about vaporware, it is not surprising that a lot people in the industry would probably be amazed to hear that R&D spending on 10G devices is still happening. While the really compelling drama within suppliers is occurring with mature or even declining market situations, including on 1G and on VCSELs, in which substantial revenue is on the line, the obsession on analyzing the accounts of the various futuristic, sexier solutions can sound repetitive, and at the end of the day, they have a tendency to be quite boring. In contrast, the struggle for 10G transport equipment vendors to survive is a captivating narrative involving a data rate, which will remain a mainstay in public and enterprise networks for a very long time -- in which there is still an overabundance of participants (partially because financing going back to...

Read More

Latest Title II Opened: Property Rights Raid

February, 2015

After the extraordinary action of not making its document on applying Title II rules to the Internet before its formal meeting on the matter, resembling the behavior of a repressive regime, the FCC has voted on the order. Yet inexplicably, even an estimate of the timing of the release of the report that could have such a devastating impact on the ISP market has not been provided by the agency. One of the most egregious aspects of this whole regulatory shift is that after 30 years past the original divestiture of AT&T, the former Bell companies are still not allowed full freedom in the ownership and direction of their networks, a lot of which was built after 1984. The chairman of the FCC actually had the gall to describe the process as “one of the most transparent proceedings that this commission has ever run.” He also appeared to be disingenuous in stating that “releasing a rough...

Read More

Optical Hardware Innovation Permanently

February, 2015

At the OFC 2015 show next month, the Rump Session is entitled, “Is it 'Game Over' for Hardware?” The discussion will be about “[s]ome industry trends like SDN appear[ing] to make optics hardware engineering and innovation irrelevant and shift innovation into software-based network control [while] [o]ther industry trends like [s]ilicon [p]hotonics appear[ing] to create great new opportunities for hardware innovation.” Of course, while around the world, all kinds of fantastic developments in fiber optic gear continually take place in laboratories, the really important focus should be on actual implementation of new solutions in the telecom space, which has historically tended to be driven by events or needs that were unpredictable in nature. Just the specific network requirements of one large carrier can determine the success of a particular solution. In the same way, the...

Read More

New Title II Will Choke Optical Investment

February, 2015

The logical presumption associated with the madness of the FCC’s planned takeover of the Internet will be that service providers should be expected to cut back on fiber optic network investment to an absolute minimum, at least until litigation in the courts has been completed. It is also reasonable to conclude that the impact on purchasing of equipment by these carriers of net traffic will be even worse than what happened with the Telecommunications Act of 1996 in which the incumbent carriers were forced to unbundle their infrastructure. The expected Title II ruling is more detrimental because it is a demonstration of a federal agency, reflecting the overall plan of the current administration, which is behaving as if it has virtually boundless legal authority over Internet service providers. Up until fairly recently, there was bipartisan support in the US for a more or less of a...

Read More

Cyberattacks: Lower Bandwidth Growth Rates?

January, 2015

Going back to 9/11, there began the realization that an attack on data center infrastructure would make a large corporation the most vulnerable – even more than the loss of the leadership. Simply put, it could stop business in the water. It seems that one of the biggest areas of potential exposure to cyberattacks is in the handoff to outside networks, and if there is a substantial shift in enterprises minimizing these interfaces, it would obviously decrease the amount of bandwidth needed for transport by public networks. We know of one Fortune 250 corporation, which has had at least two encounters with cyber hackers in China over the last two years regarding stolen intellectual property. One of the attacks involved Windows 2000 (Microsoft retired and stopped supporting those servers), and so the engineering team moved horizontally across the company to take control of those relevant...

Read More

Another Savior of Data Center MM Fiber?

January, 2015

In addition to the development of longer-distance and higher-speed VCSELs, there is a possibility that in the long term, polymer waveguide material embedded in electronics could also help to extend the life of multimode fiber in data centers. Yet right now, the technology appears to be reminiscent of the use of silicon photonics with active components, but without the hype. As with SI photonics, the concept of these types of waveguides has been discussed for many years with the problem of loss being a major concern, and right now, the vast majority of dialog on the latter can be found almost exclusively in engineering papers and patent applications. An exception has been Dow Corning, which has for a while been making somewhat of a marketing push, such as at trade shows with its short-reach interconnects utilizing “low loss,” silicone-based polymer waveguides. Back in early 2013,...

Read More

No Blowback from Neophotonics Pickup

January, 2015

Before the closing of its deal for Emcore’s narrow linewidth tunable laser product line this month, it had been difficult to find any criticism given that Neophotonics bought Santur several years ago. Apparently, there had been some rumblings of a culture clash amongst the personnel with the prior marriage. In fairness, despite a company doing as much due diligence as possible in advance of a purchase, there is no way to really look under the hood until after sale. In addition, the price for Emcore’s devices was only $1.5 million in cash with the rest of the $17.5 million in debt. Emcore’s former solutions appear to be unique with their external cavity lasers, which provide a very narrow linewidth at the 100G data rate. However, at least one major system vendor has indicated its willingness to put up with a certain number of errors in the software, and that it is good enough just...

Read More

Absurdity of Stressing Metro 100G Now

January, 2015

A couple of financial analysts have been touting Ciena as the expected big winner for a future contract for a large 100G metro project at Verizon. While there can be little doubt that the vendor would be part of such a deal, it needs to always be remembered that these announced agreements never compel the service provider to buy one dime from any supplier, and so the actual amount of equipment purchased could be far less than initially indicated. Moreover, the conspicuous absence in the current discussion of Fujitsu, a vitally important metro incumbent vendor to Verizon, strongly points to the service provider buying less than a stellar amount of this gear anytime soon. Above all, current expectations for growth in the total 100G market are nothing to write home about – one market research firm, usually among the bullish crowd in general, is only projecting about a 25% increase in...

Read More

Google and Cars: Same Revenue Stream

December, 2014

There tends to be a lack of a full understanding of the intention behind the bulk, if not all of Google’s investments in new solutions. At the end of the day, they are each about the enablement of, or at the very least, showing the way of increasing the amount of Internet traffic in order for the company to enlarge the size of its principal business – advertising on the web. Google’s work on the self-driving automobile is no different in that to whatever extent a driver can legitimately divert attention while on the road, that person can potentially be spending time on the Net. In comprehending the mentality behind Google’s investments, one can see why it is pushing for the ultimate vision in autonomous automobiles. It is inconceivable that the firm would want to actually be a player in such a heavily regulated and extremely competitive market as well as open itself up to an...

Read More

Cisco: Buyer of Potential Finisar-JDSU Combo?

December, 2014

If Finisar purchases JDSU’s CCOP division, would a systems integrator be interested in buying the combination? Unquestionably, there have been rumors in the past that Cisco Systems would buy Finisar, which with CCOP, would make Cisco’s previous component acquisitions pale in comparison in terms of cornering the market. Moreover, the full system supplier has been Finisar’s biggest customer for a long time. There is a school of thought that when Cisco decided to cease having a distinct transport business unit, it was making a statement that optics stopped being an end in itself – it was really a means to an end. While selling optical network gear remains part of its general strategy, its principal purpose is supposedly to tie routers and the server farms as well as offer the backbone for its software. According to this theory, Cisco’s purchases of CoreOptics and Lightwire are...

Read More

Finisar Buyout of JDSU’s CCOP Inevitable?

December, 2014

Simply by a process of elimination, it is difficult to foresee any other player besides Finisar being interested in purchasing JDSU’s planned spinoff of its optical components portfolio, Communications and Commercial Optical Products (CCOP). Such a deal would provide Finisar with further diversification in the telecommunications transport space as well as potentially in new business sectors. Also, to whatever extent they presently go head to head with each other, it would eliminate a competitor from engaging in the cutthroat pricing behavior that is so prevalent in the market today. With its heavy focus on data communications, some industry observers have mentioned Avago Technologies as a possible acquirer of those JDSU assets in order to broaden its product line. However, there is a high likelihood that Avago would have a hard time justifying such a takeover after its relatively...

Read More

Data Centers Moving to “Sweat” Shops

December, 2014

What is really happening in the greening of the data center? We are not seeing orders of magnitude reduction of power consumption. We are not seeing the use of cleaner power plants. Evidently, engineers and other individuals working at Data Centers (DCs) will be increasingly making wardrobe changes from light jackets and slacks to shorts and sleeveless shirts. The expectation is that the standard operating mode for many DCs will be as high as 90 degrees Fahrenheit. At least one major components vendor is working on chip sets, which will work more effectively under such conditions and actually, the permitted temperature for a server can normally reach 90°F (although it is usually advocated not to go beyond 77°F). Obviously, in moving in this direction, the cost of cooling a DC can come down substantially. However, what is not as recognizable is the extremely high cost of having all of...

Read More

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...

Read More

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...

Read More

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...

Read More

Net Neutrality: Hurtful Government Whims

November, 2014

The notion of neutrality in general is a myth. Nations that claim to be neutral in inter-state conflicts are hardly impartial. If country A has a major advantage in its conflict with country B, the so-called non-aligned party is in effect supporting the former, and potentially leading to its winning the fight. When the US government is pushing the notion of net neutrality, it is also a canard because corporations by definition are not neutral because they want to defeat their competitors and make money for their shareholders. Arbitrarily forcing them to provide bandwidth in ways that are not economical will only suppress new investments in technology – leading to even more constraints in networks. The capricious nature of the US government to decide on policies can have beneficial results. The original breakup of AT&T in 1984 led to a massive fiber optic build-outs because MCI and...

Read More

Integrated Photonics Manufacturing Institute: “Panoptic” Danger

October, 2014

One should hardly rule out the risk of the Integrated Photonics Manufacturing Institute (IPMI) morphing into an all-encompassing and permanent industrial policy for the US. The term “integrated photonics” is so ambiguous and nebulous as to potentially include every facet of new optical technology. Also, it is a sure bet that manufacturing itself will not turn out to be the essential role of IPMI in the long term, rather actual R&D work on newfangled solutions will be its focus – with the potential of hampering future technical development far into the future. There are ample precedents for private-public partnerships straying away from their original missions. SEMATECH’s essential mandate at the beginning was really just to increase knowledge of advanced production processes for semiconductors. Later, the consortium’s goals changed to include branching out into the build-up of...

Read More

Uncle Sam: Major VC for Optical Gear Development Indefinitely?

October, 2014

Where will the money come from to fund R&D for next generations of fiber optic equipment in the telecommunications and data communications markets? Clearly, the vendors will have enough trouble just keeping up with the changes on existing equipment in what are many cases relatively low-margin businesses – and will be quite hesitant to move ahead significantly on next-gen devices before they get an adequate return on their original investments, including 100G. Despite the heavy amount of cash going into silicon photonics, the increasingly pessimistic outlook for its future could easily result in the last straw for venture capital firms for an extremely long time, which almost assuredly to this day have not fully received their money back on devices at much lower speeds, including those systems operating at 10 megabits and at 10 gigabits. Certainly, the situation of getting an adequate...

Read More

OpSIS’ Demise: Politically Incorrect Si Photonic Wafers

October, 2014

This past July, OpSIS announced that the program funding its core operations for silicon photonic Multi-Project Wafers (MPWs) had ended and that it would cease operations. Evidently, the US government around that time was uninterested in supporting the continued existence of the foundry, which had been receiving all of its capital from the private sector. Only about a few months later, the Administration along with the Department of Defense (DOD) apparently changed its mind on the importance of such MPWs, as the White House came out with its $200 million initiative – in effect, making OpSIS a loser before the Integrated Photonics Manufacturing Institute (IPMI) was even established. A fundamental problem with public-private partnerships is that it not only puts the government in the position of picking the winners of technological solutions, but the actual players involved in the game....

Read More

Intel Behind $200M Photonics Competition?

October, 2014

The US government did not call it a “silicon photonics contest.” Perhaps the federal funding for this new Institute for Manufacturing Innovation (IMI) would permit Intel and others to gradually shift to more of a generic term for its future development of chips that includes optics, but would not necessarily involve silicon. Actually, in a recent announcement, IBM implied that its new $3 billion, five-year plan for chip development, might not comprise Si photonics. IMI is quite reminiscent of SEMATECH (SEmiconductor MAnufacturing TECHnology), incorporated in 1987, which became a not-for-profit consortium that included the US Department of Defense (DOD) as well as semiconductor suppliers and educational institutions. Its main purpose was to grab back leadership on market share with chips, which was taken away by Japanese companies. There seemed little doubt that early on, Intel was...

Read More

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...

Read More

Videoconferencing: The Elusive Business Application

September, 2014

Although it was 50 years ago that AT&T introduced the Picturephone at the World’s Fair, the company is still striving to “encourage the adoption of videoconferencing” at major corporations today. There has just not been a significant cultural shift in the business community to making deals without shaking hands in person. Yet, there are also very practical considerations in videoconferencing providing an inadequate sense of being in the room, and not allowing for a close consideration of body language to assess the impact of a presentation. While webinars have undoubtedly reduced the amount of traveling substantially in prequalifying sales prospects in offering graphical video displays in communications, there is no real need to have a live picture of the people in the conversation. So, videoconferencing is partly about using a solution in which there is not a problem. Also,...

Read More

Finisar Getting a Raw Deal with Silicon Photonics

September, 2014

When it comes to technology development, some of the leading analysts in the financial community have a tendency to blindly follow a template of conventional wisdom. One of the most egregious examples was during the bubble when there was the widespread notion that the need for bandwidth could not be satiated, and service providers were literally being punished for installing insufficient dark fiber. A similar injustice has occurred with Finisar with the imagined threat to the company by the introduction of silicon photonics. These investment firms talk about the “checks” they conduct in drawing their conclusions. Well, how about spending approximately five minutes checking with an objective optical scientist? As we suggested in a recent blog article, it is clear that in general, development of silicon photonics for active components has for several decades been akin to placing a...

Read More

Silicon Photonics: Widespread Usage on Active Components Doubtful

September, 2014

While the amount of industry chatter about silicon photonics rose substantially in 2014, partially because of certain market research firms looking to sell more reports, the technological hurdles, especially with insertion loss, make extensive use of active, combined components, such as for modulators and photodetectors, unlikely in the foreseeable future. Although there have definitely been numerous demonstrations of integrating with these CMOS fabrication processes, like with receivers, both the performance and cost are superior with standard methods. Certainly for passive devices, silicon lends itself quite well to integration, including for AWGs. Instead of using micro optics, combining waveguides with attenuators is being accomplished with Si. With 100G receivers, the delay lines are being integrated with the phase combiners with either silicon or Indium Phosphide. Given the...

Read More