Most in technology tend to be optimists. But things do not always work out. Markets crash, technologies change, competitors slash prices and even healthy end-markets have seizures from time-to-time. In complex ecosystems there are simply a lot of exogenous factors that can ravage a company because they were a tad too early, a tad too late, or a tad too under-funded. Today, these problems are being interpreted as meaning a bleak future for optical communications. We do not think so. While there are a lot of exciting, perhaps even game-changing developments in other areas of technology right now, we think in rough times like this it is too easy to be pessimistic and short-sighted.
In 2003, we were frequently asked the question, what inning is company X in? Back then the answer was actually pretty easy and usually a low number. Today the answer is a higher number and more conditional, but nonetheless still relatively low compared to other technology sectors. Why? The need for optical communication equipment; data traffic and video still grows and infrastructure will need to be upgraded to meet that demand. Dislocation and rearrangement at the service provider and system vendor level is apt to be large for the foreseeable future, but that does not alter our optimism about optical communications components, it just makes it harder to predict where it flows and when. A few of the areas where it is still early in the game are:
40 Gb/s Components and Systems: Be there or be square. We believe that it has taken roughly 10 years for 10G to surpass 2.5G and there will be many more years of 40G growth before it is eclipsed by 100G. Opportunities in high-speed components should be both long-lived and more profitable than their less exclusive predecessors. In terms of commercial volumes, we are only in the first inning.
Flexible Networks: Though ROADMs (Reconfigurable Add Drop Multiplexers) and tunable lasers have already been a significant market for at least three years. The eventual ubiquity of flexible networking in both high speed long-haul and metro networks would have us guessing we are only in the second inning.
Software and Standards: The Emergence of Carrier Ethernet in telecommunications is only one aspect of a changing landscape at carriers for sophisticated network management. We think we are only in the second inning.
It is possible to argue that the heady early days of new technologies that change the direction of the communications industry is behind us (though not for sure), but we think the long runway for actual deployments belie the current market pessimism.
