Abstract
"To date the optical transceiver industry has been largely unaffected by the
disruption among carrier and system vendors because the carriers' network
transformations - such as next-generation OSS, service delivery platforms and
IP Multimedia Subsystems (IMS) - are taking place in the network layers above
transport," noted Dr. Roy Rubenstein, research director, LightCounting.
"Inevitably, such change must have an impact, and though years of downturn
have left technology and industry resources spread thin, if anything, the
importance of optical transceiver players as fundamental network enablers will
only grow in coming years." says Rubenstein.
The profitability of the optical transceiver business remains questionable
despite the steady growth in revenues. Very few vendors maintained a decent
30-40% growth margin and posted profits in 2007. Average gross margin of
publicly traded transceiver vendors remains at 25%, while optical equipment
manufacturers and service providers commonly maintain 40-60% margins. Fierce
competition among numerous optical component and transceiver vendors, selling
into a consolidated optical networking equipment market, will continue to
limit profitability. Despite several mergers and acquisition made in
2006-2007, the optical transceiver industry needs further consolidation.
Looming economic recession in the U.S. adds urgency to this process.
This report outlines the state of the transceiver industry and examines
industry dynamics across several market segments including SONET/SDH,
Ethernet, Fibre Channel, WDM, FTTx transceivers and optical interconnects.
Confidential sales data reported to LightCounting by leading transceiver
vendors was used to analyze industry consolidation. The report also discusses
profitability and diversification of transceiver vendors, their key customers
and suppliers. Different scenarios for imminent industry consolidation are
presented in the report, offering guidance to vendors involved in this market.
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