New Markets for Telecom and Datacom Lasers: 2007 to 2012

SUMMARY

Goals and Scope of this Report

The key objective of the report is to determine and quantify where the major opportunities are to be found in the telecom and datacom laser business over the next five years.

The report covers the full range of laser architecture and technologies (DFB, FP, DBR, VCSEL, tunables, etc.) and materials platforms. We also examine the laser requirements, market drivers and challenges for each of the main application areas; acess/FTTH, metro, long-haul, LAN and SAN. The scope of the report is universal in terms of data rates supported. However, because the report is primarily concerned with new opportunities, our focus is on 10 Gbps networks, which are here now and a not completely commoditized as far as lasers are concerned. It is also on emerging 40, 100 and 160 Gbps networks.

Since we believe that significant cost improvements may result from innovations in packaging and integration, these are also topics that we return to throughout the report. While the forecasts at the end of the report are for five years only, we comment on likely developments in the laser space beyond that timeframe, which is when the transition to much higher speeds will have major impacts in terms of new business opportunities. Almost every firm in the laser space - and beyond that almost every firm in the entire telecom/datacom components space - are now becoming fixated on the (possibly) glittering prizes at 40 Gbps and 100 Gbps.

We have also included in this report an analysis of the strategies being adopted by laser firms both large and small and, as with all CIR reports, this study also includes a detailed five-year forecast of the markets covered.

Methodology of this Report

The information and analysis contained in this report are based on an extensive interview program conducted primarily during the second and third quarters of 2007. Firms covered in this program included most of the largest suppliers of laser devices, as well as important start ups. We have also based our analysis on the views of carriers and network equipment firms. While no claim is made that our selection of firms for interviewing is "scientific" in any precise sense, we did try to include firms that were either influential in the segments of the markets that they served or could potentially be so. In our interviews, we did not use a structured questionnaire, but instead focused our discussions with the firms interviewed on their particular area of activity. This approach, CIR believes, leads to the deepest insight into what is really driving markets.

In addition to the primary research carried out for this report, CIR also conducted an extensive search of secondary sources including research publications, white papers, corporate web sites, SEC information, conference proceedings and previous CIR reports.

The forecasting methodology used in this report is discussed in greater detail in chapter four -- the chapter of the report that deals with forecasting. However, it is based on the modeling techniques that have been developed by CIR over the past 25 years. The actual models used have, however, been updated to reflect the radically new situation that we find in the optical components business at the present time.

Plan of Report

Chapter Two of this report analyzes discusses the technological evolution of telecom and datacom lasers. In Chapter Three, we look at the market requirements for these devices. Finally in Chapter Four we forecast the market for each of the major communications laser market segments.

TABLE OF CONTENTS

Executive Summary

• E.1 Current and Future Market Environment for the Laser Business
• E.2 Summary of Emerging Opportunities in the Telecom and Datacom Laser Business
• E.3 Firms to Watch
• E.4 Summary of Forecasts

Chapter One Introduction

• 1.1 Background to this Report
• 1.2 Objective and Scope of this Report
• 1.3 Methodology of this Report
• 1.4 Plan of this Report

Chapter Two Technological Evolution of Telecom and Datacom Lasers

• 2.1 Introduction
• 2.2 The Role of Optical Integration in Improving Laser Technology
• 2.3 Meeting the Technical Challenges of Lasers for Networks Operating at 40 Gbps and Above
  • 2.3.1 Modulation and Modulators
  • 2.3.2 New Materials
• 2.4 Evolution of VCSEL technology
  • 2.4.1 10 Gbps VCSELs
  • 2.4.2 VCSEL Arrays
• 2.5 Silicon Lasers
• 2.6 Tunable Lasers
  • 2.6.1 Mechanisms for Tunable Lasers
  • 2.6.2 Lowering the Cost of Tunable Lasers
• 2.7 Light Sources for POF
• 2.8 Pump Lasers
• 2.9 Developments in Manufacturing Technology

Chapter Three Market Requirements for Telecom and Data Com Lasers

• 3.1 Introduction
• 3.2 Evolution of Requirements for Lasers in Access and Enterprise Networks
  • 3.2.1 Ethernet and Fibre Channel
  • 3.2.2 Lasers for PONs
• 3.3 Evolution of Requirements for Metro and Long-Haul Networks
• 3.4 Emerging Requirements for Lasers Driven by Standards and MSAs

Chapter Four Five-Year Forecasts

• 4.1 Forecasting Methodology
• 4.2. Forecast of Market by Laser Type
• 4.3 Forecast of Market by Network Segment
• 4.4 Forecast of Market by Networking Protocol
• 4.5 Summary of Market Forecasts