CIR Report Uncovers New Opportunities in the Optical Components Market.

Business Editors

CHARLOTTESVILLE, Va.--(BUSINESS WIRE)--Nov. 6, 2000

The recent sell off of optical stocks that has hurt Nortel, JDS-Uniphase and many lesser companies is a warning to both investors and strategic planners in optical companies to think more clearly about where the opportunities lie in the optical communications industry, according to Communications Industry Researchers, (CIR) an optical industry consulting firm, based here.

Rather than believe vendor hype and self-serving projections from industry analysts, CIR claims that from now on, both Wall Street and optical company management will have to determine the real marketplace needs for optical communications products. And in its just-released report, OPTICAL COMPONENTS MARKETS: 2000-2004, CIR has followed this philosophy to reveal some of the most profitable opportunities that are still emerging in the optical components business.

Switch On, Tune In and Connect

In its new report on the optical components business, CIR points to three especially attractive growth opportunities within the optical components sector:

-Optical Switching Components. CIR believes that service providers will begin to make "significant deployments" of optical crossconnects during the next 12 months and this will generate significant revenues for optical switching components manufacturers. These manufacturers will also see their business boosted by demand for their products for optical add/drop multiplexing and protection switching applications. However, CIR's new report warns that MEMS, which has emerged as the market leading technology for optical switching, will increasingly be challenged by integrated optical solutions from components and sub-systems vendors such as Trellis Photonics and Optical Switch Corporation. CIR projects that as a result of the new trends in optical switching the $247 million U.S. optical switching component and subsystems market will turn into a $2 billion market by 2004.

-Tunable Lasers. A second area of opportunity pointed out in OPTICAL COMPONENTS MARKETS: 2000-2004 is the tunable laser market. Tunable lasers are the latest generation of light sources that permit frequency tuning. Using tunable lasers can help service providers cut down on their laser inventories and provide improved fault and provisioning management. Tunable lasers also hold out the prospect of novel ways of doing all-optical switching and CIR believes that this versatility will lead to the U.S. market for tunable lasers growing from $5 million this year to $1.2 billion by 2004. This is an area that is already being exploited by Nortel and Lucent, but is also an area where innovative start-ups, such as Iolon, appear. CIR says it expects to see more such start-ups appear over the next 12 months.

-Optical Connectors. Optical connectors are low-tech compared with optical switches and tunable lasers. However, CIR believes that there will be considerable opportunities for both industry giants such as Tyco and smaller companies as the result of the move towards DWDM and all-optical equipment generally. More optics means more connectors. At the same time, the optical equipment industry is looking to build systems with smaller footprints and, as a result, is in a quest for ever smaller connectors. CIR believes that, while $150 million is being spent in the U.S. on optical connectors for telecommunications equipment, this figure will spiral up to $1 billion by 2004.

Truth in Forecasting

CIR has been forecasting the fiber optics business for well over 15 years and has extensive knowledge of its economic structure and dynamics. The forecasts contained in this report are therefore based on a seasoned and realistic understanding of market requirements. In particular, the components market projections contained in OPTICAL COMPONENTS MARKETS: 2000-2004 are derived from CIR's projections of optical equipment markets, which have been utilized by virtually every major vendor in the field and these in turn are based on extensive interviews to understand the needs of service providers. As a result of this approach, CIR's forecasting methodology emphasizes real demand over industry hype.

OPTICAL COMPONENTS MARKETS: 2000-2004 is, however, much more than just a forecast of the U.S. optical components market. It also discusses the main technology and product trends and vendor strategies in all of the key areas of the components and subsystems business, including light sources and modulators, filters and gratings, DWDM components, amplifiers, optical switching and connectors. The report was based on an extensive interview program that included most of the major manufacturers active in the components space as well as many of the leading equipment vendors, who form the customer base for the components industry.

OPTICAL COMPONENTS MARKETS: 2000-2004 is priced at $4,000 for hard copy. Electronic copies and corporate site licenses are also available for an additional fee. Please visit CIR's Web site at http://www.cir-inc.com for a detailed table of contents or contact CIR's Director of Sales and Marketing, Robert Nolan at 617/923-7611 or [e-mail] for additional information.

Based in Charlottesville, Virginia, Communications Industry Researchers, Inc. was founded in 1979. The company publishes market studies and carries out demanding custom market research assignments on the commercial aspects of new communications technologies. CIR specializes in the areas of optical networking and optical components and provides objective expertise for the vendor, service provider and user communities that is client focused but not client directed.