7 March 2011 3:09:55 PM
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By Alain Couder
This week I’ll have an opportunity to present at the OSA Executive Forum, held in conjunction with OFC/NFOEC, on a panel titled “Where is the Optical Components Market Going?” This is going to be a very interesting discussion highlighting some of the challenges our industry is facing and how we overcome them to achieve long-term sustainable growth.
We have all seen the optical industry go through major consolidation and transformation over the last several years and we have continued to see innovation throughout the core optical network. The mass adoption of lasers and fiber optics has driven down price points that are spearheading tremendous growth in our industry. In the telecom market, we are seeing an explosive growth of the Internet driven by demand for new types of video and Internet services and this is driving a dramatic transformation in the bandwidth requirements and design of optical networks. In addition, optical interconnects are replacing electrical solutions at a rapid rate and laser beam applications are appearing everywhere and in everyday life and becoming very high-volume businesses.
Moving forward, I think the optical industry must reach business model targets similar to the semiconductor industry. If optical companies are going to prosper, we must continue to invest in R&D and capital equipment in order to drive innovation and growth. In order to have the cash to invest properly, we must aspire to higher gross margins, in line with the semiconductor industry. We are going to start seeing substantial barriers to entry for optical companies as our industry evolves -- with software, continued integration of functionality onto a single chip, and very high-speed electronics becoming the primary drivers for market leadership and profitability. I believe it will be the companies with chip-level innovation, vertical integration and manufacturing scale that will garner the highest profits.
As a result of these trends, the barriers to entry are going to increase and it will be more important for companies to execute quickly and effectively and bring new and innovative products to market. The opportunities in our industry are tremendous and new technologies in development today will fuel future innovation. The market is huge and growing, and Oclaro is very well positioned to capitalize on that growth.
President and CEO