The Lightwave Blog

Posted by Stephen Hardy

As reported by Morgan Keegan's Paul Bonenfant, Opnext President and CEO Harry Bosco yesterday morning told the audience at Cowen and Company's 20/20 TMT Conference in New York that the reason he hasn't executed a previously announced stock buy back is that he's "looking at different things" now that the acquisition price for companies has come down. In particular, he said, he's looking at high-end optics, specifically 40G and 100G module and technology companies. "Some are small and some are fairly significant," he said.

Bonenfant identified Mintera and StrataLight as the two most prominent companies of interest. He believes a StrataLight acquisition is more likely, given the fact that JDSU has invested in Mintera. The fact that StrataLight supplies technology to Nokia Siemens Networks, as does Opnext, doesn't hurt either.

One company that Bonenfant didn't mention that Opnext also might be looking at is CoreOptics. The company is already active in 40G development as well as coherent detection technology for 100G. (See my May 15 blog posting below.) The fact that the OIF has decided to build its 100G DWDM implentation agreement around dual-polarization quadrature phase-shift keying with coherent detection indicates that CoreOptics is moving in the right direction for 100G.

Labels: CoreOptics, JDSU, Mintera, Opnext, StrataLight

Posted by Stephen Hardy

In light of today's announcement regarding the partnership between JDSU and Mintera, it's clear JDSU believes the 40G market is worth pursuing. This belief comes from the company's insight into the RFPs their system house customers are fielding, according to Director of Product Marketing Craig Iwata.

"JDSU is involved in pretty much every transport RFP that's out there. And they're all coming through with requirements for 40-gig," he told me.

While there's a difference between requiring 40G capability and actually fielding it, Iwata also told me that the market research community is backing this viewpoint as well. As part of the presentation he and Mintera's Niall Robinson delivered to me last week, Iwata said that when you look at the 40G line-side interface forecasts from CIR, Infonetics, and Ovum-RHK, the average unit CAGR for 2008 through 2011 is 100%, with their respective hockey sticks all taking a distinctly upward turn beginning in 2009.

Neither Ovum-RHK nor Infonetics have much on the public parts of their websites covering their 40G forecasts. You can find a little bit about CIR's view here and here.

As usual, the big issue will be cost, Daryl Innis of Ovum-RHK told me. "There's still a serious price problem. The cost of a 40-gig line card is something like five to six times the cost of a 10-gig line card. Until that cost comes down, that's going to limit the growth rate of 40-gig," he said.

I think there's mounting evidence that there will indeed be a market for 40G technology, particularly in the long haul and ultra long haul. (Which probably translates into a "good" but not "great" market.) Certainly 100G will eventually overtake 40G in terms of popularity, but that's going to be a fairly long time coming. The standards have to be put in place first -- and if 40G technology currently is 5X to 6X your average 10G system, one can only imaging the price differentials of the first and even second generations of 100G platforms.

Labels: 40 Gbps, 40G, JDSU, Mintera