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Technology Stocks : Ciena (CIEN)
CIEN 254.19+10.1%Jan 6 4:00 PM EST
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To: craig crawford who wrote (2053)4/30/1998 12:47:00 AM
From: Milkman   of 12623
 
Craig, sorry it took so long to respond.

<<I guess I don't quite understand what you are saying. Are you saying that it costs CIEN more than twice as much money to develop a DWDM with twice as much capacity? Or are you saying that the carriers who buy the DWDM equipment will have to pay more than twice as much to double their capacity?>>

What I am saying is that CIEN and all the others that plan to come out with the next generation DWDM products will have to struggle with cost. I am disinclined to buy the microprocessor comparison because it is more of a commodity product with extremely wide distribution and massive volume that allows the manufacturer to recoup R&D and establish manufacturing and raw material efficiencies.

<<Either way I'm not sure I agree. Microprocessors are millions of times more powerful today than they were a few decades ago, yet they don't cost a million times as much and they didn't cost someone like INTC millions of times as much money to build.>>

I would point to the next generation televisions or the next generation cars (Electric) or the next generation ATM based bandwidth management products(LU/Alcatel/Etc...). These products will all likely come at a premium unless/until the manufacturers (CIEN,LU,Etc..) are willing to sacrifice margin or are able to establish development/production efficiencies.

Maybe the cost to manufacture is more than double maybe it's not. All of the manufacturers will have a hard time selling it unless the cost benefit for the end users makes sense.

Regards,

Milkman
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