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Ten years after the telecom bubble burst, the optical components and transceiver industry is once again on the rise. The current upswing offers a well deserved break for suppliers struggling through years of modest market growth, combined with fierce competition among suppliers and very demanding customers. The question is whether present successes will prove sustainable for more than just a few quarters. While clearly some of the increased activity is a result of several slow quarters in late 2008 and early 2009 as customers are replenishing inventories, a few factors suggest that accelerated market growth will be sustained for several years:

• LightCounting data on optical transceiver shipments in 2004–2009 suggest that investments in network infrastructure were lagging traffic growth by 10-15% per year, so increased investment may be required now to catch up.
• Major upgrades to datacenters worldwide are clearly underway, fueled by online applications and services. New datacenters require much more optical connectivity than in the past because of increased data rates and changes in datacenter architecture.
• Increasing usage of wireless bandwidth triggered substantial upgrades to wireless back haul, driving demand for high-data-rate optical transceivers.
• Sales of tunable transceiver modules and ROADM are benefiting from higher expectations to timelines of network deployment and restoration, as these components reduce the time required to set up or reconfigure networking systems.

This report outlines the state of the optical component and transceiver industry, examining the industry dynamics in several market segments including SONET/SDH, Ethernet, Fibre Channel, WDM, FTTx, and optical interconnects. Leading vendors shared confidential sales data with LightCounting that enables an analysis of the industry’s health. The report also discusses the profitability and diversification of transceiver vendors as well as their customers and suppliers.

Chapters:

• Abstract
• Executive Summary
• 1. Changing Market Landscape
  • Vendor Profitability
  • Market Share Structure and Diversification of Vendors
• 2. Industry Supply Chain and Market Segmentation
  • Optical Transceiver Market Dynamics
  • SONET/SDH Market Segment
  • Ethernet Market Segment
  • Fibre Channel Market Segment
  • WDM Market Segment
  • FTTx Market Segment
  • Optical Interconnects Market
• 3. State of the Telecom and Datacom Markets and their Likely Impact on Optical
  • Telecom
  • Datacom
• 4. Transceiver Supplier Strategies For Success
• Appendix A: Net Income of Publicly Traded Optical Component and Transceiver Vendors
• Appendix B: Gross Margins of Selected Companies across the Optical Networking Supply Chain
• Appendix C: Optical Component and Module (including 10GBASE-T) Vendors, Listed Alphabetically

Tables:

• Table 1: Diversification of the Top Ten Transceiver Vendors in 2009
• Table 2: Optical Segment Revenues of Publicly Reported Transceiver Vendors
• Table 3. Summary of M&A and IPOs From 2008 to Early 2010

Figures:

• Figure 1: Market Shares of Top Ten Optical Transceiver Vendors
• Figure 2: Historical Data and Forecast For Global Optical Transceiver Sales
• Figure 3: Average Profitability of Publicly Traded Transceiver and Optical Component Vendors
• Figure 4: Industry Average Non-GAAP Net Quarterly Income
• Figure 5: Average Gross Margin Across the Supply Chain
• Figure 6: Global Transceiver Market Share Between 2005 and 2009
• Figure 7: Optical Transceiver Industry Structure
• Figure 8. Transceiver Market Segments Sales Projections
• Figure 9: The SONET/SDH Transceiver Market Share, 2006 and 2009
• Figure 10: The Ethernet Transceiver Vendor Market Share, 2006 to 2009
• Figure 11: The Fibre Channel Transceiver Market 2006 to 2009
• Figure 12: The WDM Transceiver Market Share 2006 to 2009
• Figure 13: The FTTx Transceiver Market Share 2006 to 2009
• Figure 14. Sales of Optical Interconnects 2007 to 2013
• Figure 15: Growth in Network Traffic and Bandwidth
• Figure 16. Utilized Bandwidth in Core Telecom and FTTx Access Networks