Here’s a top 10 list of my most notable observations from the Executive Forum at the Optical Fiber Conference in Anaheim last Monday.
- When the Carrier panelists (Verizon, AT&T, BT) spoke of SONET/SDH they used the past tense. “When we used to build a SONET/SDH ring”. They appear to have subconsciously moved on.
- According to Ryan Limaye from Goldman Sachs, Sanford Bernstein issued a report analyzing what would happen to the Telcos if they became a dumb pipe. The result? Much smaller but more financially efficient companies with a better return on equity. All of the carriers with the exception of British Telecom were not open to the idea of being a dumb pipe.
- Observation: Equipment guys are asking for 40Gb/s components, and component vendors are giving them the finger. The fact that component vendors no longer allow equipment vendors to outsource R&D with a low ROI is a very positive development for this business. People are finally saying no.
- 40Gb/s demand pressure is from carriers who deployed the Cisco CRS-1 router and need something to hook it up to. Stephen Carlton from Fujitsu kicks in that 40G muxponders make up the other 50% of demand. Many speculate 40G will be bypassed altogether in favor of 100Gb/s Ethernet using new modulation schemes.
- Jerry Rawls from Finisar (FNSR) – “It is impossible to deliver the level of R&D expected by customers given current margin levels”. “Custom Tweaked Requirements are hard coded into the Telecom psyche and may be impossible to remove”.
- Fariba Danesh from Avago (private) – “Finisar pricing is making things difficult for us” (I didn’t get a precise quote… but this definitely was the jist).
- Jo Major from Avanex (AVNX) – “Huawei still tends to buy at the component level.” Something I’ve covered in depth (see Dr. Strangelove, Or: How I learned to stop worrying and love Huawei)
- Mike Nishiguchi from ExceLight – “Optical Modules are footprint compatible but the components that go into them are not. Why? We should think about this.” On outsourcing (heavily paraphrased): “The Japanese are not good at giving people titles and job descriptions. This is because they are not good at partitioning responsibility. And this is why I believe Japanese companies are not good at outsourcing their manufacturing”.
- Gary Wiseman from Intel (INTC) Promises $150 SFP+ module in 2008. Claims 10G-BaseT will be delayed due to 2.5us latency, 6W of power, and new cabling. He clearly wants to keep copper interconnect out of 10Gb/s.
- Stephen Carlton from Fujitsu (FJTSY) – “Don’t design your network for Video because much bigger drivers exist in the near future. Japan is trailblazing these applications with a cashless society, hyper-mobility, and other application innovation. Their greatest lead isn’t in FTTH, it is in application innovation.” Example: Take a photo of your sushi and your mobile will tell you when it was caught and what boat it came from. Stephen’s comments were unique and a refreshing break from the “Video Broadband Explosion” cited again and again by many talking heads.
Many of these quotes are paraphrased though I feel I captured the intent of the speaker. If I did not, please speak up. Some of these topics have follow up articles that I may release publicly.
Full disclosure: I am long Finisar.