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JUNE 30, 2008 -- The optical transceiver market continues to grow with sales totaling $557 million in the first quarter of 2008, up 15% compared to Q1 2007, according to the latest Sales Report from LightCounting (search for LightCounting).
(The company announced last Friday that the total optical transceiver market declined by 2% in the first quarter of 2008, mainly due to a greater than 10% decline in the SONET/SDH segment that was partly offset by sales of high-data-rate DWDM modules. See "LightCounting: Transceiver sales slipped in 1Q08.")
Showing no sign of a market slowdown, most vendors greatly increased their profit margins in Q1 2008 compared to Q1 2007. The most striking development in Q1 2008 was the booming demand for SFP+ transceivers with shipments of 10-Gigabit Ethernet SFP+ transceivers surpassing all other 10-Gigabit Ethernet form factors in Q1 2008--an industry first, say analysts.
"The increased profit margins and the considerable rise of SFP+ shipments are reasons for optimism, given current economic conditions," notes Dr. Roy Rubenstein, director of research at LightCounting. "The healthier profit margins indicate that optical transceiver vendors have gained better control over their costs and suggest a slowing in the price war that has been harming profitability."
LightCounting views the Finisar/Optium all-stock merger, announced in mid-2008, as well as Emcore's adding of Intel Optical Division's enterprise and storage assets to the telecom assets it bought in late 2007 as important steps toward optical transceiver industry consolidation.
"The Finisar/Optium all-stock merger in mid-2008 is a very positive development for the optical transceiver industry and takes consolidation to the next level, challenging other vendors to respond," contends Vladimir Kozlov, founder of LightCounting. "The numerous smaller deals announced in 2006-2007 have not changed the industry landscape significantly, but in the longer term, we expect that consolidation of transceiver vendors like the Finisar/Optium and Emcore/Intel deals will further drive industry profitability."
This LightCounting Sales Report offers an analysis of quarterly transceiver sales in SONET/SDH, Ethernet, Fibre Channel, WDM, FTTx market segments. It also correlates transceiver shipments with sales of optical networking equipment and deployment of communication systems by service providers. Data for the report was provided confidentially by more than 20 leading transceiver vendors.
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