Monday, September 28, 2009

FTTH in the U.S. vs. small countries--Part 2

Recently I wrote that it's nonsense to compare small country FTTH data to U.S. FTTH data, especially if the purpose is to suggest that somehow the U.S. is falling behind in FTTH adoption. I received some good feedback that adds to that argument, and even argues that the U.S. is one of the leaders in last-mile telecom infrastructure.

My point in the earlier post was basically that small populations will fill out a wider distribution than the larger groups of which they are members. Small populations will fill the wings of the distribution, as well as the center. So, don't compare Andorra or Iceland FTTH data to that of the U.S. Compare the data to Palo Alto. Or rural Alaska. But not to the U.S.

Moreover, many countries have more centralized telecom policies than in the U.S., where policymaking is fragmented among states, municipalities, and multiple branches of the federal government. There are lots of rural coops in the U.S. with advanced telecom infrastructures that rival Andorra. And many that are way behind. But you don't know that from aggregated data.

Former colleague and optical fiber analyst extraordinaire Richard Mack noted a couple things that suggest that the U.S. is not behind, but arguably among the leaders in broadband infrastructure.

First, he says, figures of merit that look at broadband lines per population don't consider that a lot of broadband comes through the workplace in shared links other than FTTH or DSL. When a recent report redefined the figure of merit to include all types of use and other factors, the U.S. actually comes out on top.

The figures of merit also don't consider what is being done with the broadband. The U.S. is arguably the leader in innovation in applications like YouTube and Facebook, not to mention more substantive computing applications. This has to count for something. Such innovations aren't coming out of Andorra or Iceland (although tiny Estonia is home to the headquarters of Skype, thanks to the flattening effect of telecom).

I contributed to a Congressional study many years ago that pointed out that investment in telecom infrastructure has been shown to correlate strongly to economic development in poor areas. At some point, however, there are diminishing returns. So, contrary to cheerleading that "the global race for FTTH is on," economies should invest in the broadband (and not necessarily always FTTH) that it needs at that time. Too much investment and you have a bubble. Too little and you miss opportunities.

The point is this: when you see someone spinning FTTH or broadband data, ask hard questions about what it really says.

Monday, September 21, 2009

Consolidation--Part 3: Image sensors as a case study

I can't think of a photonics market where someone doesn't frequently say, consolidation is a-comin'. The image sensor market is no exception. So when we finished our new image sensor report, I wanted to see how it looked over the 13 or so years that we've tracked that market. And you know what? The more things change, the more they stay the same.

At the high level, there hasn't been one iota of consolidation in all those years, despite the fact that the image sensor business has grown about 10X in that time. The first chart shows a simple way of measuring the consolidation. It shows that the top 5 suppliers have had about the same overall share over many years.

I should note here that the membership in the Top 5 has changed during that time. That is, the market share is not static. It's just that there is no sign of a move toward consolidation at that level.

Individual segments, on the other hand, are often highly consolidated. For example, the sales of image sensors for security cameras, for optical mice, and for certain scientific and professional applications are held by just a few players in each case. In fact, this is typical of photonic products, where the overall category is really a hodge podge of subsegments, and few, if any, suppliers can ever achieve significant market share overall.

The next chart shows how the number of suppliers has changed over the years. Far from consolidating, the number of suppliers has increased since the commercial success of CMOS image sensors in this decade. In fact, just as one supplier is acquired or exits the market, another pops up.

So, when referring to consolidation, be sure to mention whether you are referring to a narrow segment, or the overall market. Consolidation in narrow segments is common, while consolidation in the overall product group is unusual.

Friday, September 18, 2009

Stanford Symposium: Extreme lasers for the next 50 years

If you think that laser performance is about maxed out, think of this. An extreme ultrafast laser as an alternative to particle accelerators. A high energy laser undergoing testing for initiating deuterium fusion. Optical tweezers that have unveiled the mechanical forces of kinesin, the protein that moves cargo within cells. And the brightest hard x-ray laser in the world, now up and running at SLAC. These were highlights from this year’s Stanford Photonics Research Center annual symposium, which also launched the first event of LaserFest, the official celebration of the 50th anniversary of the laser.

Gerard Mourou, from Europe’s ultrafast ELI project, led off by describing how we are entering a new era in high peak power lasers. The 1960s began the Coulombic epoch, where lasers could excite atoms to higher energy states, but still bound to the atoms. The 1990s saw the Relativistic epoch, where lasers can excite particles to relativistic levels. He said that we are about to enter the Nonlinear QED epoch, where lasers may examine the vacuum itself by scattering off of the virtual particles generated in the vacuum (which is essentially the “ether” of yore).

Such new lasers offer an alternative to giant particle accelerators. An accelerator uses a “momentum paradigm,” meaning that it imparts high momentum to particles and then observes them in a small volume. An extreme ultrafast laser operates in an “amplitude paradigm,” said Mourou. It is good for low mass particles, perhaps even dark energy, by observing them with low momentum in a larger volume.

At another extreme, the National Ignition Facility (NIF) at Livermore, California, will be the most energetic laser system in the world when it is fully operational. In fact, each of the parallel solid-state lasers of the facility is the largest in the world. All 198 of them are combined and focused to a target the size of a peppercorn inside a can the size of a pencil eraser. The overall system takes up a building that covers three football fields.

The NIF has three missions. One, to help understand the aging nuclear weapons arsenal. Second, to advance the study of fundamental physics. And third, it offers a path to clean fusion energy, with the aim of following up with a dedicated steady-state fusion reactor. Such a prototype reactor, and the many that might one day follow, would use oodles of diodes for pumping solid-state lasers, a potential killer app not lost on many diode suppliers (and one that I will comment on in a later blog piece).

A point that came out was the many years these grand projects can take to launch. In two of the projects here, it took 10 to 14 years to win funding, and another 4 to 10 years for construction. It adds up to 18 to 20 years from concept to completion.

Mourou noted that the laser has seen no boundaries, only horizons. If all goes well, these grand projects will do far more than just break performance records.

Tuesday, September 8, 2009

Why small countries will always lead in FTTH

This just out today: the FTTH Council Europe reported the European countries with top FTTH penetration. The list is revealing, with Andorra at number 4. Number 4! This means that once again we have to put up with articles asking why the U.S. is lagging tiny Andorra in FTTH penetration.

The council announced that the top 10 countries with more than 10% penetration are: Sweden, Norway, Slovenia, Andorra, Denmark, Iceland, Lithuania, the Netherlands, Slovakia, and Finland. Note that the top country, Sweden, only has about 9 million people. Andorra has about 84,000.

Other lists of this type have put countries like Singapore, South Korea, and Iceland at the top of lists of countries with high broadband or FTTH penetration. In the next breath, a policy wonk somewhere will claim that this shows that the U.S. is falling behind these up-and-coming countries. For example, here's a policy report from 2006 doing just that. The U.S. trends toward the OECD average over time as smaller countries fill out the bell curve, but that's ignored. Rather, it's spun as a call for action.

What is never pointed out is that large populations--like the U.S. or the European Union--comprise a set of smaller, more diverse populations. A grade school student knows that, no matter how you define it, the average over the total is somewhere in the middle. Some of the smaller constituents have to end up in the wings. In the U.S., progressive rural coops and wealthier communities can lead the country in fiber penetration, while many tribal lands are far behind even in basic phone service.

Moreover, any student of politics knows that countries like Sweden, Singapore, and South Korea are more inclined to adopt centralized public policies than the U.S. In the U.S., the Administration, Congress, FCC, the courts, each of 50 states, and even municipalities make telecom policy. Some of the municipalities are like Andorra, to be sure, but the overall patchwork is far from centralized, thanks to things like the Bill of Rights and the general Wild West temperament of U.S. public policy.

Policies encouraging substantial investment in FTTH may be a great thing for the U.S. I'm of the view that it's a lot more complicated than that. But whatever your view, please don't say that the U.S. is falling behind because tiny Andorra has greater penetration than the U.S.

Thursday, September 3, 2009

HB-LED market on track for strong growth

When a market drops about 4% in a year like this, it's almost a relief that it's not worse. But when it looks to grow 32% per year compounded from 2009 through 2013, that's really good news. That is the situation in the high-brightness LED market.

In our new HB-LED market report, we are forecasting the worldwide market to decline 3.7% in 2009 from $5.1 billion in 2008 due to the declining sales in the end-user markets, mainly mobile phone handsets and automotive. But we project growth to resume in 2010 on the assumption that the worldwide economy will be recovering by then.

Meanwhile, there is increasing penetration in new applications, particularly in LCD backlighting and general lighting. As these segments kick in, thanks also to improving technology, the growth rates surge some more, to reach $14.9 billion in 2013. By the way, these values represent packaged LEDs, not chips or lighting fixtures.

The top level forecast isn't much different from the forecast we presented at our Strategies in Light Conference in February, but now we have a good part of 2009 behind us. The report has a lot more detail than the conference, of course, and is an update of our report last year around this time.

Did I mention that the new report is our 10th edition on the HB-LEDs market? We first reported on it in 1995. (We already reported this year on lighting fixtures and replacement lamps.)