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Technology Stocks : The *NEW* Frank Coluccio Technology Forum -- Ignore unavailable to you. Want to Upgrade?

To: Frank A. Coluccio who wrote (20995)	5/18/2007 7:25:05 PM
From: Frank A. Coluccio	Respond to of 46821

From the Gilder Friday Letter of May 18, 2007 Charlie Burger, Gilder Telecosm Report (May 2007): Who isn't making ROADMs? Or 10 gigabit per second (10G) transceivers? If you tried to answer those questions in Anaheim during the last week of March, you might have begun beating your brow during the first day and running out of names after listing yourself, your mother, and Mickey and Goofy at nearby Disneyland. For three full days I scurried from the exhibit conclave of the Optical Fiber Communications (OFC) conference to the Marriot meeting rooms across the street to the press quarters upstairs in the convention center to the forums downstairs and back to the exhibit floor in a congested local loop saturated with gigahertz hype and closed-door spec-sheet trysts. Through it all, I managed to avoid getting lost or incurring scheduling collisions. How did I do it? By careful preplanning. But then I learned from the experts I was on the wrong track. Optical networks don?t preplan their paths any more. They go with the flow, using the reconfigurability of ROADMs . We cast off the burden of crafting schedules and fixing appointments and get flexible instead. Verizon (VZ) has, enriching bubble-era startup CoAdna Photonics in the process. As the sole supplier of wavelength selective switches (WSSs) for the Tellabs (TLABS) 7100 Optical Transport System, CoAdna is in turn providing all of the optical switching modules for Verizon?s network upgrade, thereby leaping into an early lead over second-place JDSU (JDSU) in sales of these critical components of all-optical, wavelength routed networks. Short for reconfigurable optical add-drop multiplexers, ROADMs come in three varieties. The most flexible of these exploit WSS modules such as the ones CoAdna sells to Tellabs. These third-generation optical switches are just now emerging, following the success of first-generation wavelength blockers and second-generation planar lightwave circuits. Wavelength blockers use either microelectromechanical systems (MEMS) or liquid crystals (LCs) to block dropped channels and attenuate the remaining channels passing through a network node in order to bring signal power into balance before new wavelengths are added. Until recently, wavelength blockers claimed the bulk of ROADM sales but are now being rapidly eclipsed by the newer generation switches, beginning with planar technologies, which integrate a multiplexer and blocker on a single chip. (Multiplexers/demultiplexers combine and separate wavelengths in wavelength division multiplexed (WDM) networks, and planar devices use arrayed waveguide gratings to perform these functions.) While planar products benefit from integration and are economical in volume production, they are limited to one drop or one add port per chip, and the dropped/added wavelengths are fixed. By contrast, a single WSS module, based on MEMS or liquid crystal technology, can be dynamically tuned to drop or add any combination of wavelengths to as many as nine ports today and up to several dozen ports in the future. Market forecaster Ovum-RHK sees sales of WSS modules rising from $11 million last year to $71 million in 2010, despite their significantly higher cost, while sales of blockers hold steady at $15 million and sales of components for planar products hang in the $40s millions. Which ROADM companies, if any, have shown themselves clearly ascendant and which are more likely to flatten your financial prospects? Log on to the Gilder Telecosm Forum, the web?s premier technology investment message board, at www.gildertech.com, to learn more. ------