1.0 Introduction
This report chronicles some of the latest investments that have been made in the active optical components sectors in recent months and analyzes their meaning.
2.0 Why They are Investing
These new investments are encouraging, just from the point of view in that they show a renewed confidence in the components market. This market certainly needs this
boost-in total, it is probably about one-fifth of where it was five years ago and it could be another decade before it gets back to where it used to be. But why are serious VCs investing now?
CIR research indicates that the answers to these questions are symptomatic of an industry in maturity:
- Many of the deals listed above are in the tunable and/or low-cost laser space and the investments made are simply old investors coming back to provide more money for a firm that had proved it could win real customers.
- The funding for CyOptics is presumably intended to smooth over the consolidation of the old TriQuint optical business into CyOptics existing operations - consolidation being a phenomenon that inevitably is associated with industry maturity.
- The money is going to firms with established technology. This does not necessarily mean that manufacturers of OC-3 gear should jump up and down with glee and expect to see VCs fall over themselves to give them the big bucks. What is likely to get the money is not old technology, but rather those technologies that were bleeding edge during the optical era and have proved themselves since. Tunable lasers are the best example. (Sadly, its quite hard to find too many technologies that emerged during the optical boom and actually made it to commercialization.)
- Unlike the optical era, where the money was going for R&D and development work - not to mention extravagant parties at trade shows - today new investment is for ramping up production.
3.0 Future Technology Investment Outlook
As we have seen, investment money that is going into the optical components market now is primarily for sustaining purposes. This raises the question of whether there will soon be a round of new investment in new technologies. We believe that there is some possibility of this. We see two areas that are potentially important in this regard, though neither are probably short-term moneymakers:
- Low cost optics (for interconnects and FTTx)
- 40-Gbps networking.
A third area - quantum dots - which has been essentially of interest primarily in the R&D community until recently, also now looks like it might have a shot at being a commercializable technology.
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