News Article

Tunable Laser Competition Hots Up

A deluge of tunable laser releases at last week's OFC will drive down selling prices, but 100 Gbit/s communications promise another round of innovation.

The recent raft of announcements about the latest tunable laser releases should come with a health warning, as excessive competition in this market segment may stunt its growth.

That s the view of Daryl Inniss, market analyst for communications components at Ovum RHK. The future growth rate for tunable lasers will now only match the overall component industry, despite their currently lucrative position, Inniss says.

That rate will be 11 percent through to 2012, according to the report “Forecast: Optical Component Opportunities" that Ovum released on February 25.

Inniss says that there is already evidence that the high prices of tunables are now in decline.

“When Bookham introduced their tunable lasers the prices started to fall," he said. “Just one new entrant had a significant impact on pricing."

Inniss report release coincided with the Optical Fiber Conference (OFC), held in San Diego, from which companies like Bookham, Eudyna, Pirelli, Luna and NeoPhotonics all announced their latest tunable lasers.

He sees the market for tunable lasers expanding from $85 million in 2006, to $154  million in 2012. If tunable lasers are successfully integrated into the XFP form factor, as JDSU and others are currently striving to do, the market could grow still further.

“It s a weird market," Inniss conceded, “because where does a company make its money? At the beginning of a new product or at its end?"

“There s so much competition that the prices just fall off. At the beginning you have maybe a year or two before there's this intense competition. It s a very difficult market to make profitable."

The bandwidth played on
Inniss felt that this was one contributor to a mixed outlook on the business landscape at OFC. Overall optical communication companies have recorded some of their best performances for years, and the trading outlook is good, he said. However, companies are concerned about poor stock market reaction to their efforts and the possibility of a recession in North America.

On the optimistic side, Inniss applauded the inaugural demonstrations of 100 Gbit/s technologies at OFC, and explained how they could provide a new opportunity for chip makers.

“The same tunable lasers could go into 100 Gbit/s products, but on the shorter reach, say 40 km or less, there is substantial development needed for transmitters," he said.

“For 10 and 40 km, IEEE is talking about multiplexing four lasers at 25 Gbit/s into a singlemode fiber," says Inniss. He explained that this will begin by combining four lasers built on separate chips, but that will prove too expensive in the long term. “What suppliers are going to have to do is integrate four lasers onto one InP chip," he said.

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