As a supplier in the photonics or telecom food chain, should you care about the landmark decision this week over the FCC vs. Comcast? In short, no. It’s above your job grade. Here’s why.
Much is made about this kind of thing at the carrier level, since it impacts how they do their business. And what the carriers do—who wins and who loses—impacts the optical equipment vendors. And that passes on to the component vendors, who win or lose depending on their customers . So far, that’s all true.
But these kinds of decisions are really for policy wonks and legal nerds. I know, because I’m a recovering wonk myself. I once worked on telecom policy for Congress.
It’s not that technologists are above policy issues, or have nothing to contribute. Technologists are notoriously aloof in policy debates, but badly needed.
Rather, the neutrality debate is irrelevant to the optical networking community because it’s mostly decoupled from the day to day business of the network. There are so many other factors that are also very important. Think of the 50 states and the District of Columbia. Each has a regulatory agency. There are municipal agencies. Federal courts. The FCC. Congress. European countries. The European Commission. Japan. China. India. And a hundred other countries. Think of Google, iPhones, Facebook, Youtube. Think of refrigerators with IP addresses. (Then again, let’s leave that out.)
While policies get worked out, traffic just keeps on going up and up. And no one really has a good grasp just exactly how fast the traffic is growing, much less how much it will grow in the future. And even when big policy decisions are made, the consequences take years to work out. There will be more appeals, reactions by competitors, possibly legislation.
It’s important to take an interest in Net Neutrality as a citizen. It’s about whether you think broadband service should be a regulated utility, or if it should be a competitive service. And yes, the consequences do trickle down to the equipment and component vendors. But the ones who stand to gain the most from these debates? Lawyers and government affairs officers (also known as lobbyists). That’s a certainty.
Friday, April 9, 2010
Friday, March 26, 2010
Fragmentation depends on your point of view
A recent poster on the Photonics LinkedIn group was impressed by the stratification and fragmentation in the HB-LED business. The self-described newcomer can be excused for being naïve, but there are some things I think are worth repeating here. Most importantly, whether fragmentation is good or bad depends on where you sit.
A lot of people like to compare photonics with some industry X just before the industry took off. The most common example is silicon electronics in some early stage. Who wouldn’t want to repeat that ride?
But that’s a poor analogy. Photonics components are more like airplane parts than CMOS. Most photonics parts are highly specialized, and the suppliers can often make a nice profit because of the complexity or service they provide. That's good for a lot of companies, including small and medium size companies. For them, fragmentation is good. It means niche opportunities for them.
However, it turns out that a lot of photonics parts require an expensive clean room—a fab. Anyone who has an expensive capital investment, like a fab, wants to get volume through it to pay for the lights, and that favors consolidation. These suppliers want everyone else to get out of the business and leave it to them. Who wouldn’t? So, many of these companies look to minimize differences in products, even if it means standardizing the parts a little and giving up some of the profit margin. For them, fragmentation is bad because it limits their volume, and therefore their profitability.
If you are a customer or an end-user, there is occasionally a segment where consolidation is needed to lower the price to the customer, and move the market forward. But these opportunities are rare. When they appear, the customers usually have a way of forcing standardization onto the suppliers, not the other way around. Solid-state lighting might be an example where consolidation might help the end-user. (Or not, since it's not the only factor in its adoption.)
But watch out what you wish for. What's good for the customer, or for one supplier, may not be good for everyone. Whether the consolidation is good or bad depends on whether you survive the shake-out or not.
In summary:
* Photonics markets are notoriously fragmented.
* They always will be.
* That’s good for some companies.
* That’s bad for some companies.
* Consolidating suppliers can sometimes help grow the industry, but watch out what you wish for.
A lot of people like to compare photonics with some industry X just before the industry took off. The most common example is silicon electronics in some early stage. Who wouldn’t want to repeat that ride?
But that’s a poor analogy. Photonics components are more like airplane parts than CMOS. Most photonics parts are highly specialized, and the suppliers can often make a nice profit because of the complexity or service they provide. That's good for a lot of companies, including small and medium size companies. For them, fragmentation is good. It means niche opportunities for them.
However, it turns out that a lot of photonics parts require an expensive clean room—a fab. Anyone who has an expensive capital investment, like a fab, wants to get volume through it to pay for the lights, and that favors consolidation. These suppliers want everyone else to get out of the business and leave it to them. Who wouldn’t? So, many of these companies look to minimize differences in products, even if it means standardizing the parts a little and giving up some of the profit margin. For them, fragmentation is bad because it limits their volume, and therefore their profitability.
If you are a customer or an end-user, there is occasionally a segment where consolidation is needed to lower the price to the customer, and move the market forward. But these opportunities are rare. When they appear, the customers usually have a way of forcing standardization onto the suppliers, not the other way around. Solid-state lighting might be an example where consolidation might help the end-user. (Or not, since it's not the only factor in its adoption.)
But watch out what you wish for. What's good for the customer, or for one supplier, may not be good for everyone. Whether the consolidation is good or bad depends on whether you survive the shake-out or not.
In summary:
* Photonics markets are notoriously fragmented.
* They always will be.
* That’s good for some companies.
* That’s bad for some companies.
* Consolidating suppliers can sometimes help grow the industry, but watch out what you wish for.
Tuesday, March 2, 2010
3 countries make 87% of all lasers. Wow!
Bet you didn't know this: about 87% of all laser revenues attribute to companies headquartered in only three countries: the U.S., Japan, and Germany. Wow! Who'd have guessed?
Don't believe me? Consider that about 1/2 of all laser revenues are for diode lasers for communications and optical storage. These are mostly made by Japanese companies, some U.S., some Taiwan, and a few others.
Then, consider that several big laser makers hail from Germany and Japan: TRUMPF, Rofin-Sinar, FANUC, Gigaphoton, and Mitsubishi. Germany is also home to many smaller laser makers, like Jenoptik, Toptica, and (despite the name) Menlo Systems. The U.S. is the official home to many familiar names: Coherent, GSI (including Synrad, Quantronix, and Continuum), Newport, IPG, Cymer, JDS Uniphase, Oclaro, and many, many smaller companies.
I'm counting revenues here, not units. A lot of commodity lasers are made in Taiwan, or even China, for laser pointers and such things. Oh, and of course, I'm talking just the laser, not the system or end-use.
True, the assembly may be anywhere from Russia to China, but the companies are headquartered in only a few countries. This means that at least a large part of the revenues (including the profits) flow back through headquarters. (More on that in a later post.) Oh, and of course I'm talking just the laser, not the system or end-use.
For the record, this all came about from a question I got from Breck Hitz, the Executive Director of the Lasers and Electro-Optics Manufacturers Association, LEOMA, who is trying to advance laser standards at the ISO.
Don't believe me? Consider that about 1/2 of all laser revenues are for diode lasers for communications and optical storage. These are mostly made by Japanese companies, some U.S., some Taiwan, and a few others.
Then, consider that several big laser makers hail from Germany and Japan: TRUMPF, Rofin-Sinar, FANUC, Gigaphoton, and Mitsubishi. Germany is also home to many smaller laser makers, like Jenoptik, Toptica, and (despite the name) Menlo Systems. The U.S. is the official home to many familiar names: Coherent, GSI (including Synrad, Quantronix, and Continuum), Newport, IPG, Cymer, JDS Uniphase, Oclaro, and many, many smaller companies.
I'm counting revenues here, not units. A lot of commodity lasers are made in Taiwan, or even China, for laser pointers and such things. Oh, and of course, I'm talking just the laser, not the system or end-use.
True, the assembly may be anywhere from Russia to China, but the companies are headquartered in only a few countries. This means that at least a large part of the revenues (including the profits) flow back through headquarters. (More on that in a later post.) Oh, and of course I'm talking just the laser, not the system or end-use.
For the record, this all came about from a question I got from Breck Hitz, the Executive Director of the Lasers and Electro-Optics Manufacturers Association, LEOMA, who is trying to advance laser standards at the ISO.
Thursday, February 18, 2010
SIL 2010: HB-LED market to grow 53% this year
Our 11th annual Strategies in Light event ended last week and it was symbolic of the LED and LED lighting market. Booming. In fact, the big takeaway is exactly that. The HB-LED market will surge 53% in 2010 to $8.2 billion, going to $20.2 billion by 2014. Did you get that? That’s $20 billion. That's a respectable number compared to other components sectors, like semiconductors and displays. And, it grew 5% in 2009, despite the recession.
This is so big, saying much else takes away from the message. And anyway, my colleagues at LEDs Magazine were all over the event, so you can go there to find out the details. You might especially like this chart of our LED market forecast, at the magazine’s site.
The event was a indication of the expectations in the LED market. We had nearly 3,000 total attendees and 88 exhibitors, each up about 50% from 2009.
The LED lighting part of the event is really gaining mindshare, with its separate conference track, LED lighting tutorials, a new Solid-State Lighting Investors Forum, and a new LED Lighting pavilion in the exhibit area. There was also a lot of discussion about broader systems issues like LED-specific thermal management, suitable optics, efficient drivers, LED-friendly controllers, and all that. In short, it’s not just about the LED anymore.
This is so big, saying much else takes away from the message. And anyway, my colleagues at LEDs Magazine were all over the event, so you can go there to find out the details. You might especially like this chart of our LED market forecast, at the magazine’s site.
The event was a indication of the expectations in the LED market. We had nearly 3,000 total attendees and 88 exhibitors, each up about 50% from 2009.
The LED lighting part of the event is really gaining mindshare, with its separate conference track, LED lighting tutorials, a new Solid-State Lighting Investors Forum, and a new LED Lighting pavilion in the exhibit area. There was also a lot of discussion about broader systems issues like LED-specific thermal management, suitable optics, efficient drivers, LED-friendly controllers, and all that. In short, it’s not just about the LED anymore.
Monday, February 8, 2010
The next big imaging technology: OMI
If you haven’t heard of optical molecular imaging (OMI), get ready to hear more about it. OMI is about to move into clinical use as one of the key tools in personalized medicine. Growth of equipment sales is on track to reach $400 million in 2014 and nearly $1 billion by 2020. Yes, you heard that right.
Don’t confuse this new imaging technology with OCT (on which we also have a new market report). Think of optical molecular imaging more like CT or MRI, but using visible light emission from molecular agents. OMI can be used in living tissue as a tool for examining diseases or drug effectiveness. It’s highly portable, fast, and less expensive than conventional imaging, and it has the potential to be used in the doctor’s office.
There are a lot of factors in this market rollout, though. The growth hinges on partnerships with key medical equipment vendors, the outcomes of clinical trials assessing imaging agents, regulatory approvals, patent litigation, and decisions about insurance reimbursement.
The market will likely expand in two directions: research systems and clinical systems. Recent advances in imaging agents will power the transition of optical techniques from the lab to clinical settings. Large imaging firms, such as GE Healthcare, Siemens, and Philips, are beginning to pursue optical molecular imaging, while over 12 companies are already marketing OMI systems. A large part of the revenues will be from the imaging agents, animal models (that is, genetically-engineered mice), accessories, software, services, and licensing.
As always, ours is a high quality market report, and the only comprehensive one out there. Kudos to our good friend and lead author, Susan Reiss.
Don’t confuse this new imaging technology with OCT (on which we also have a new market report). Think of optical molecular imaging more like CT or MRI, but using visible light emission from molecular agents. OMI can be used in living tissue as a tool for examining diseases or drug effectiveness. It’s highly portable, fast, and less expensive than conventional imaging, and it has the potential to be used in the doctor’s office.
There are a lot of factors in this market rollout, though. The growth hinges on partnerships with key medical equipment vendors, the outcomes of clinical trials assessing imaging agents, regulatory approvals, patent litigation, and decisions about insurance reimbursement.
The market will likely expand in two directions: research systems and clinical systems. Recent advances in imaging agents will power the transition of optical techniques from the lab to clinical settings. Large imaging firms, such as GE Healthcare, Siemens, and Philips, are beginning to pursue optical molecular imaging, while over 12 companies are already marketing OMI systems. A large part of the revenues will be from the imaging agents, animal models (that is, genetically-engineered mice), accessories, software, services, and licensing.
As always, ours is a high quality market report, and the only comprehensive one out there. Kudos to our good friend and lead author, Susan Reiss.
Friday, January 29, 2010
Photonics West--what theatrics and so not 2009
I don't know if it's the new Moscone Center venue, the laser show at the conference reception, or the fact that this is 2010, not 2009, but Photonics West was really booming this year. And the statistics say it all: over 18,000 visitors, a new record. That is now more than Semicon West, in both visitors and booths. (Don't believe me? Check here.)
First, there was the venue. San Francisco is more expensive, and a lot of us locals have easier access getting in and out of San Jose. But there was a classier feel to the show this year. It's like Photonics West moved to a major league ballpark. And the vendors that were formerly in the tents in San Jose must have felt a lot better getting equal traffic at Moscone. At least the roof wasn't leaking on the rainy days like before.
Then there were the theatrics. SPIE put on a great reception, with Cirque performers, old clips of lasers from James Bond, and a laser magic show. There was a great exhibit of old lasers in the North Hall. And it helped that Apple unveiled its iPad on Wednesday on the same block. If you go out to a restaurant, you are more likely to recognize someone in San Jose and less likely to encounter panhandlers, but San Francisco has more stuff happening.
And finally, there was the economy. The feeling was that if you showed up, that's already an achievement. 2009 was a terrible year, but companies responded to the recession quickly, and the market seems to have bottomed out in mid- to late-2009. This time last year the market was still in decline. We were still looking at the abyss. Now, while visibility is still poor, the most likely scenario is modest growth from the new low, plus or minus in either direction a little.
Photonics West is about product development, which still must go on even during recessions. Conference highlights were: OCT imaging, molecular imaging, or for that matter, anything combining bio and imaging. In fact, BiOS was booming. Also mid-infrared, quantum cascade lasers, and terahertz.
On the show side, I have to say that there wasn't anything that struck me as especially new this year. But then again, the Photonics West show is all about nuts and bolts, so it's hard to stand out in the middle of all that.
I also got to tour the National Ignition Facility on Thursday, which is something any laser engineer should see. But, I'll get to that another day.
First, there was the venue. San Francisco is more expensive, and a lot of us locals have easier access getting in and out of San Jose. But there was a classier feel to the show this year. It's like Photonics West moved to a major league ballpark. And the vendors that were formerly in the tents in San Jose must have felt a lot better getting equal traffic at Moscone. At least the roof wasn't leaking on the rainy days like before.
Then there were the theatrics. SPIE put on a great reception, with Cirque performers, old clips of lasers from James Bond, and a laser magic show. There was a great exhibit of old lasers in the North Hall. And it helped that Apple unveiled its iPad on Wednesday on the same block. If you go out to a restaurant, you are more likely to recognize someone in San Jose and less likely to encounter panhandlers, but San Francisco has more stuff happening.
And finally, there was the economy. The feeling was that if you showed up, that's already an achievement. 2009 was a terrible year, but companies responded to the recession quickly, and the market seems to have bottomed out in mid- to late-2009. This time last year the market was still in decline. We were still looking at the abyss. Now, while visibility is still poor, the most likely scenario is modest growth from the new low, plus or minus in either direction a little.
Photonics West is about product development, which still must go on even during recessions. Conference highlights were: OCT imaging, molecular imaging, or for that matter, anything combining bio and imaging. In fact, BiOS was booming. Also mid-infrared, quantum cascade lasers, and terahertz.
On the show side, I have to say that there wasn't anything that struck me as especially new this year. But then again, the Photonics West show is all about nuts and bolts, so it's hard to stand out in the middle of all that.
I also got to tour the National Ignition Facility on Thursday, which is something any laser engineer should see. But, I'll get to that another day.
Thursday, December 31, 2009
New report: OCT has a good 2009
How good is the OCT equipment market these days? It grew in 2009, despite the recession, and that's in units, not just exchange rate adjustments. That’s how good it is. What’s more, we’re expecting 20% compound growth through 2014. This is from our latest OCT market report, now officially released.
If you don’t know what it is, OCT is a great imaging technology. OCT systems use advanced optics to construct micron-scale cross-sectional and 3D images in real time. The technique is non-invasive and can be used in vivo, such as to examine the inside of the human eye. The business is now entering a new phase, beyond ophthalmology to new specialties, such as looking inside arteries for cardiology. Each of these applications has the potential to be as big or bigger than the sales today in ophthalmology.
OCT may sound arcane, especially if you have to pronounce its full name. But this is big stuff, with equipment sales now in the hundreds of millions of dollars per year. Much of the activity has been driven by a shift in the technology from time-domain systems to faster Fourier-domain systems, which are also not as limited by patent protection.
Carl Zeiss Meditec no longer holds the majority of market share, even as its own revenue has grown. At least 21 other companies are developing and/or marketing OCT systems in 8 medical specialties, as well as in R&D and industrial applications. Many more companies supply the sources, detectors, and related components that enable OCT systems and applications.
Oh, and did I mention? Our market report is the only comprehensive report on the topic, a follow-on to an earlier report, also sponsored by PennWell. Kudos to our good friend, Greg Smolka.
If you don’t know what it is, OCT is a great imaging technology. OCT systems use advanced optics to construct micron-scale cross-sectional and 3D images in real time. The technique is non-invasive and can be used in vivo, such as to examine the inside of the human eye. The business is now entering a new phase, beyond ophthalmology to new specialties, such as looking inside arteries for cardiology. Each of these applications has the potential to be as big or bigger than the sales today in ophthalmology.
OCT may sound arcane, especially if you have to pronounce its full name. But this is big stuff, with equipment sales now in the hundreds of millions of dollars per year. Much of the activity has been driven by a shift in the technology from time-domain systems to faster Fourier-domain systems, which are also not as limited by patent protection.
Carl Zeiss Meditec no longer holds the majority of market share, even as its own revenue has grown. At least 21 other companies are developing and/or marketing OCT systems in 8 medical specialties, as well as in R&D and industrial applications. Many more companies supply the sources, detectors, and related components that enable OCT systems and applications.
Oh, and did I mention? Our market report is the only comprehensive report on the topic, a follow-on to an earlier report, also sponsored by PennWell. Kudos to our good friend, Greg Smolka.
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