Avanex, Bookham agree on turn in component market

FREMONT, CA AND SAN JOSE, CA-While they didn’t address speculation that they’ll soon be working for the same company, executives from Avanex and Bookham agree that optical component suppliers are finally seeing an increase in demand for new technology, rather than cheaper versions of old technology.

FREMONT, CA AND SAN JOSE, CA-While they didn’t address speculation that they’ll soon be working for the same company, executives from Avanex and Bookham agree that optical component suppliers are finally seeing an increase in demand for new technology, rather than cheaper versions of old technology.

Giorgio Anania, CEO of Bookham, and Giovanni Barbarossa, CTO of Avanex, expressed their opinions December 6 at the 2006 OIDA Annual Forum in Washington, DC. Barbarossa spoke first, saying that carriers and their systems suppliers have begun to emphasize lower cost per bit when discussing their requirements. Barbarossa said his customers see new technologies as a path toward this goal-an interest that contrasts with post-bubble emphasis on significantly lower prices for the components they were already buying, regardless of the effect on their suppliers’ financial health. Tunable devices and other technologies that promote flexibility are now in high demand, he said. He revealed that Avanex plans to announce a low-cost reconfigurable optical add/drop multiplexer (ROADM) subsystem in the March 2007 timeframe. That said, he added in a conversation the next day that customers are looking for more than just tunable lasers and ROADMs, and that Avanex will be addressing customer requirements with a wide range of new and recently announced products.

Anania agreed with Barbarossa’s vision in his presentation later on the 6th, citing customer interest in such technologies as tunable lasers, ROADMs, high-speed (more than 10 Gbit/sec) transmission, pluggable components, and electronic dispersion compensation. This has led to a healthy market outlook. Citing what he called sustained market expansion since 2003, Anania commented, “Basically, I’m not worried about market growth.”

While he also cited “islands of profitability,” Anania added that the component and subsystem business continues to face challenges. For example, while ROADMs are popular, he called the business case for supplying this demand “difficult,” particularly for wavelength-selective switches. He suggested such items might have to be considered loss leaders for the short term. He also said that component suppliers face a customer base that comprises a few, often unprofitable, consolidating OEMs. The interest in new technology also requires a new cycle of technology reinvestment, according to Anania. He suggested as well that consolidation within the optical component and subsystem space has been “slower than expected.”

Conversation among forum attendees indicated that the industry expects Anania’s company and Avanex will address this last situation directly.

-Stephen Hardy
Chief Editor, Lightwave Magazine

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