Collaboration: Fiber Networks' New Link
Daniel C. McCarthy
Adversity, it appears, breeds fraternity. Since the beginning of the year, the once-cutthroat optical networking industry has undergone an epidemic of brotherly love and cooperation in the form of business collaborations, multisource agreements, strategic alliances and joint ventures.
"When we talked to companies last year, they said, 'We have something really good here, and we're going to go it alone,' " recalled Bruce Hueners, vice president of marketing for Palomar Technologies Inc. in Vista, Calif. "But now, we've all moved down Maslow's hierarchy closer to the survival level. Equipment and component suppliers are a lot more humble this year and realize coalitions are the way to go."
For its part, Palomar signed separate strategic alliances with Axsys Technologies, Creative Automation and ILX Lightwave to jointly market and promote specific products in specific markets, to train the collective sales and marketing forces and to collaborate on manufacturing projects that roll several technologies into one.
As the Optical Internetworking Forum and other standards groups demonstrate, collaboration is not without precedent in this sector. However, many partnerships announced since the beginning of March go beyond marketing or standards discussions and, instead, require interactions that could potentially cross proprietary lines. These agreements range from multisource agreements to joint ventures to strategic alliances.
Just to name a few:
The involvement and lifetime of these agreements range from demonstrating products together at trade shows to sharing distribution territories to pooling engineering expertise and, on rare occasions, intellectual property. But except for some supplier/user collaborations, they all serve two primary purposes: Minimize risk and maximize leverage in the market.
- Alcatel Optronics, JDS Uniphase and Kamelian forged a multisource agreement defining common mechanical and optical performance specifications for semiconductor optical amplifiers.
- Alcatel Optronics, JDS Uniphase and Nortel Networks signed a multisource agreement to establish standards for a new class of 980-nm pump laser modules that use specific uncooled package platforms.
- JDS Uniphase signed a multisource agreement with Fujitsu Quantum Devices Ltd. to develop a compact receiver design that, among other benefits, will reduce the space required on 40-Gb/s circuit packs.
- Ceyba Inc. and Corning Inc. formed a joint venture to boost the collective performance of their products, particularly Ceyba's C420 network system.
- Fitel Technologies and Mitsui Chemical forged a joint venture to produce high-power 980-nm laser chips.
- Fujitsu Quantum Devices formed a strategic alliance with Optium to pool their engineering resources and enhance their collective products.
Alliances, in that context, seem like good business practice; perhaps their increase of late merely represents a healthy adjustment away from the winner-take-all attitude that dominated the optical networking sector two years ago -- a maturing of the market, so to speak.
Furthermore, rather than signaling less stability in the market, emerging collaborations can indicate greater diversity and competitiveness. That is, more competitors means more collaborations.
"The difference between now and a few years ago is that now we have a much larger number of system vendors, with different technologies, different architectures and different strategies," said Claudio Mazzali, strategic alliances manager at Corning Inc. in Corning, N.Y. "In the past, over 90 percent of the optical systems market share was divided among three or four big system houses."
Credibility in numbers
Alliances also help put potential buyers at ease. For example, a multisource agreement on electrical, optical or mechanical parameters allows customers to design their own systems to standardized specifications, and to procure and use products from any compliant vendor without having to modify their design.
That not only helps attract sales for both large and small businesses, but also lends small vendors an extra layer of credibility.
"Customers would be taking a bigger risk if they bought a one-of-a-kind design from a small company that failed," said Gerald Gottheil, director of corporate marketing for JDS Uniphase Corp. of San Jose, Calif. "But they would have more protection if they could simply switch to another vendor without having to do any redesign if the products were interchangeable within the limits of the multisource agreement."
Cooperation in creating technology naturally leads to cooperation in marketing it because, as Mazzali explained, the systems and fibers today are so advanced and complex that all details must be planned in advance.
That rule doesn't necessarily apply in reverse. Marketing partnerships don't necessarily lead to technical collaboration, but their ability to jump-start interest in a new technology can bring competitors to the same table. An example is the 40G Collaborative, which has focused the combined marketing efforts of Corning, Filtronic, JDS Uniphase, LaserComm, Lightwave Microsystems, Microwave Concepts, New Focus, Onetta, Optigain and PhotonEx.
Although its official mission is to educate the market about the availability and application of 40-Gb/s technology, the underlying goal is to increase both its visibility and credibility among potential buyers.
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