Researcher: Optical industry, with haves and have-nots, on good path
LightCounting says charging content providers for bandwidth-hungry apps like video may become necessary.
A report recently issued by LightCounting looks at the profitability of companies throughout the optical communications industry - from content providers like Amazon and Google to the optical-component manufacturers that are building the enabling technologies for extremely high-speed information transfer.
The report is titled "State of the Optical Communications Industry: On a Path to Sustainable Profitability." In it, LightCounting describes the dynamics that exist in an industry in which companies like Google enjoys high profits "by taking advantage of the network at almost no charge," and co-exist with other comanies that "are struggling to stay profitable while upgrading networking infrastructure to keep up with rapidly increasing traffic or delivering more efficient and lower cost gear or components for it."
LightCounting's founder and chief executive officer Vladimir Kozlov said, "Average profitability of content providers such as Amazon, eBay and Google doubled in 2010 compared to 2007. Profitability of optical component and equipment suppliers has also improved during the same period, but telecom service providers are yet to find a path to improve profitability, while increasing investments into networking infrastructure." LightCounting adds that consolidation is always one path to profitability, but says that approaches such as charging content providers for delivering bandwidth-hungry videos to consumers are "more innovative solutions" and may become necessary. The researcher also says that in the datacom-equipment market, if Juniper and HP can take some market share away from Cisco for high- and low-end products respectively, such a shift "should have a longer term positive effect on profitability of the whole supply chain."
Also included in the report are examinations of the optical component and module industry in market segments including SONET/SDH, Ethernet, Fibre Channel, WDM and FTTx. The report covers the major transitions that impact optical-network evolution, the company says, including cloud computing, the emergence of super data centers,and flat networking architectures.