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High Tech Woes and the Way Out
March 15, 2001
by Frank Levinson
High tech is in the midst of one of its periodic “slumps”. The NASDAQ is off from a high of nearly 5200 to now around 1900. A drop of more than 60%.
Some of the losses stem from the dot-com reality that companies do need customers, sales and profits in order to survive. Some of it stems from an over excited state of networking and storage companies that support the Internet revolution. Some of it is just the over-reaction that always occurs at time like this (and also occurred on the upside of this market as well a year ago!).
But the purpose of this column is not to provide insights into the stock market. People often ask me whether Finisar stock is going up or down. Now as Finisar is a public company and I am one of its officers, I do not have a public opinion. But more to the point … I have taken to making a note of what my response WOULD have been each time I have been asked and generally in the near term, less than 1-2 weeks, (isn’t everyone a day trader?) I have been WRONG. So, one interesting data point is that I do not know whether our stock is moving up or down, but perhaps there are some insights about our products and the general technological climate where we operate where there are insights …
So what technical non-developments are behind this collapse of share prices? It is surprising how little real technical improvement has happened over the last couple of years and tech sales are fueled by discernable differences in product performance. Let me list a few examples of imperceptible movement—
Most important is the failure of all recent PCs to be seen as different from PCs that are 2 years old. This note is being typed on a Dell Inspiron 7500 with a 500 MHz Pentium III processor, 128 MBs of memory, 20 GB hard drive, 56K modem and 10/100 Ethernet. If you compare that to even the top desktop system today with either AMD or Intel’s best processor (1.4 GHz, 256 MB RAM, 30 GB HDD, 56K modem, 10/100 Ethernet), you will find that both systems boot in about the same time, both launch applications in the same time, etc. Technology markets are propelled by the (usually) real perception that improved productivity comes from upgrading the hardware periodically. Compared to my previous machine, the Inspiron was much faster, more reliable.
More than 2 years ago, I met a new Intel hire who was working on the Merced marketing team. I asked her then why this new processor was so late. Well, as time has shown, late then was only beginning! Now called Itanium, the new processor family is still not widely released and the early reviews is that it is not a perceptible improvement. Supposedly the next generation version of it really is but it is also late.
Microsoft introduced Windows 2000 almost 2 years ago as well. I use it on the Inspiron mentioned above and it is truly a marked improvement from any previous version of any Windows™. It never crashes, it has improved device handling. But … it never crashes is pretty crummy praise for a product. It would be seriously funny the current Microsoft ads that proudly announce that the blue screen of death is now a thing of the past if it was not so pathetic.
And it is still slow. Microsoft must also take part of the credit for it taking 3 minutes to boot a machine. It rapidly fragments the disks and so you need to be a rather sophisticated user even to keep it running medium slow over time.
For the majority of applications most of us run MS Office 2000. This productivity suite works well but it seems to me that we must now question what features will come in the future to drive further upgrades. More of the same is not what is required. No news of new killer Aps in the S/W arena … and nothing that makes beautiful use of all of those additional MIPs from the new fast processors.
Networking improvement for the end user has not improved in the past 3 years. LAN connections are 10/100 Mb/s. Dial up is limited to 56K modem speeds. Worse yet, the world has reasonably fast LANs and the USA (and the world) have great transcontinental Gb/s links but we all generally rely on T1 or DSL tie these Gb/s structures together. We have a copper straw strangling the communications between our local and global communications networks! The result is fast local connections but hopelessly slow ties to the rest of the world.
My reaction to all of this is to throw open my bedroom window this evening, lean out and begin shouting to Silicon Valley where I live,
I am weary of all this and not going to take small meaningless upgrades anymore!
But this gesture stolen from the movie Network is not sufficient … so here is what Finisar is going to do to challenge this trend—
We are introducing 10 Gb/s modules to the market that are truly revolutionary. The modules have DFB lasers, on board clock recovery and serial to parallel interfaces (SERDES chips); they are small in size, stingy with power (~2.5 watts), simple to use and operate over singlemode fiber over distances from 1 meter to 10 kilometers according to the specification. (I will also let you in on a little secret … they work up to 20 km in every test we have made.)
The 10 Gb/s modules are based on manufacturable, scalable technology that will enable Finisar to help the Ethernet standard stay on the very successful track whereby a 10x increase in network speed costs only 3x more.
The modules will support the introduction of avalanche photodiodes (APDs) this year into the product thereby increasing the link distance up to 40 km. Additional WDM enhancements will come next year permitting this same module to be considered a foundational part of 100 Gb/s Ethernet! corporate-ir.net
Finisar is introducing very cost effective WDM technology through the GBIC and SFP (small form factor pluggable) product lines. Today we support 8 wavelengths on a CWDM grid from 1470 to 1610 nm with 20 nm spacing. These GBIC based parts are paired with Optical Add/Drop Multiplexer passive components that allow the very low cost deployment of metropolitan rings where every node on the ring can have its own Gb/s Ethernet drop. If the Finisar WDM technology is paired with off the shelf technology from Cisco, Extreme, Foundry and others then it is possible for the network to support 100 Mb/s connections in the metropolitan area markets for less than a total installed cost of $500 (not including monthly fiber rental charges which are shared by the whole network) quicken.excite.com
Finisar will make extensive use of avalanche photodiodes in upcoming products. APDs provide typically an additional 8 dB of link budget and they can do this for a relatively small cost impact. Today these diodes (which require rather high bias for operation) are considered exotic but they represent a terrific and simple way to enhance metropolitan area networking because the extra link budget can be used for WDM and switching.
Finisar will be supporting a number of MAN trials and even fiber to the home (FTTH) trials with the technology in 1, 2 and 3. This support will also come in the form of new passive optical devices and network models to support the wide scale deployment of the subsystem technology. What this means is that start up companies can be involved in this revolution where it was once thought to be the exclusive domain of companies whose capital was measured in the 10s of billions of dollars.
These are the things that I can specifically describe to you about today. But the level of innovation here at the moment is beyond what can be discussed or even described. Never in our 13 year history have we been more innovative or have pushed the boundaries of what is possible so rapidly. Never will we be more disruptive with the introduction of radical price/performance products!
Additional areas where innovations can be expected include—
Radical new optoelectronic packaging. What we generally have today traces its roots back for telecom devices to at least the early 1980s; for datacom the distance is certainly back to the mid-1980s. SMT, non-hermetic, integrated functions all are still in their infancy and inelegant. Packaging represents one of the most fundamental areas to look for radical cost savings in the future.
As optics begins to achieve the same level of total bandwidth use as modems did over twisted pairs, new line coding and signal processing will emerge. This is already happening but it has never achieved wide acceptance; in the next 2 years it will become commonplace. Finisar intends to be a leader here.
Fully integrated optoelectronic devices on InP or GaAs will be deployed. Arguably Finisar is already doing integration with the Sensors Unlimited array photodiode products. These devices have 256 or 512 photodiodes in a row and all must function within tight specifications. Unless the yield on an individual device is better than 99.7% then the array will not yield above 50%! So we already sell devices with up to 512 InP optoelectronic elements … and the InP camera chips which have 320 x 240 elements require integration of more than 72,000 InP opto parts on a single chip. In the future we expect the integration of lasers, amplifiers, photo detectors and amplifiers. sensorsdwdm.com
Care to join this revolution? Let’s get back to the days when new products in technology were “insanely great” and when first turned on by a new user, the “wow!” factor was palpable. That is what makes technology sell … killer apps, wow! and truly differentiable performance.
Write me back with any suggestions you have! |
