Oh, I missed two additional areas of study for people to understand more about what KVH's opportunity with the optical networking components is.
1) Listen to the 6:20 - 10:15 segment of the Business Overview section of the Q3 CC.
To find the audio, click on Investor Relations, then Audio archives, then Business Overview. Then adjust the audio scroll bar at the top of Real Player (assuming that is what you have) to the 6 minute mark.
kvh.com
2) Thanks to Upticked's fantastic transcription of the Q3 Q, I can cut and paste and bold just the appropriate parts:
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Adkins: Okay. You had indicated--as you did just now, I guess--that you were thinking of that, in prior conference calls you'd indicated that you'd thought that was a pretty large market, had large market potential for you. What about other sensors? I've been doing a little reading up, and I see that the fiber optic technology is applicable apparently in a lot of different sensor markets. Are you working in other areas also besides the current sensing?
Martin A. Kits van Heyningen: No, we're not and what we're focusing on right now is the optical networking market. The additional sensors while technically feasible--there's a lot of things you can do with fiber optics, but right now, we have an extremely exciting opportunity and some very unique technology that we're pursuing aggressively in what is a much larger market than any sensor market and that's the high-speed optical network market.
Adkins: Okay. Can you describe a little more or expand a little more fully on what-- when you say "optical networking", can you tell me or tell us what that product would be or the products would be?what are they going to do?
Martin A. Kits van Heyningen: Well, they are going to do a variety of things. The first product is this optical modulator that I described and that's a product that encodes data onto fiber. So, in all fiber optic networks, you have the problem of taking information from computers and routers and putting it into fiber for transmission. The advantage of fiber is that it has nearly infinite bandwidth in and of itself, but the problem is getting the data "the electrical data" into the fiber, and that's done by this device which is known as a modulator. So it turns the light on and off in a way that corresponds with the 1s and 0s of the digital data from the electronic stream, the digital data stream.And our technology will enable that to be done much faster and much less expensively than any method that we are aware of today.
Adkins: Do you visualize or do you see that you're going to have to license someone else's technology at this point then to build upon that or are you developing something that is proprietary just to KVH?
Martin A. Kits van Heyningen: It's proprietary to KVH. We have, as I mentioned, you know, we have almost 70 patents already. We've got 14 that are directly related to this project, and we have about 23 patents pending. So, we are very comfortable with our intellectual property position, and we do not require patents from anyone else in order to move forward here.
Steve Krueger: Question about the development timeline on the photonic fiber products and the modulator in particular. Do you have a prototype of the modulator yet, and if not, when do you expect to have a prototype that you could start sampling and showing to prospective customers?
Martin A. Kits van Heyningen: That's a great question, and that's probably something I should have addressed--and I meant to--in a conference call. You know, both of these projects are early stage developments. You know, we are looking at round numbers of twelve-month time frame for, you know, complete development. Obviously, well before that, we'll have samples that will be developing a prototype that will be testing. We are making very good progress today, but I don't want to, both for competitive reasons, and for--just simply for the fact that this is R+D and it's difficult to predict with any finite certainty, you know, details. I don't want to discuss exactly when these samples will be available, but, you know, it's not something that is going to be impacting revenue in the next couple of quarters, but it's not something that is a multi-year development project, either, so I think that in a 12-month time frame is probably as close as I'd like to nail it at this point.
Steve Krueger: Right. I heard you say that you don't have prototypes, so I wonder what are your performance targets based on then at this point?
Martin A. Kits van Heyningen: Well, we've done quite a bit of testing of--the material itself has already been tested at over 100 gigahertz. We've built parts of the devices that I mentioned in the call, so we're building it up in stages. We are using manufacturing processes which are identical to what we are using in our fiber optic sensors. So, you know, and we're doing it fairly methodically in terms of the steps that are required. Now, we feel fairly confident that because the material has already been tested, each component has been tested individually, what we are now doing is aggregating all of these inventions into the final device and that's the part that we are working on now.
Steve Krueger: Okay, thanks very much.
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