Market- versus Technology-Driven R&D in Optical Communications Industry. Winston I. Way, April 23, 2008
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1 Market- versus Technology-Driven R&D in Optical Communications Industry Winston I. Way, April 23, 2008
2 OUTLINE Bandwidth drivers and market trend Telecom R&D environment change since ATT divestiture in 1984 R&D in optical fiber communications industry R&D for niche versus volume products Implications to Taiwan s optical fiber R&D 2
3 Bandwidth Explosion and Market Trend 3
4 Why more bandwidth? HDTV IPTV (IEEE802.3ba) 4
5 Broadband Networks: Reference Architecture 5
6 Steady Bandwidth Growth Bubble time Bandwidth Growth 13%
7 Global Optical Network Forecast 7
8 Global Annual Carrier Capex: Wireline vs Wireless $USD Millions E Global Wireline Capex Y/Y Growth Global Wireless Capex Y/Y Growth 56,836 62,933 73,523 90,369 91, % 10.7% 16.9% 22.9% 1.6% 55,554 67,399 79,916 91,529 95, % 21.3% 18.4% 14.7% 4.7% (Source: Credit Suisse) 8
9 Global ON Forecast by Product Group 9
10 10GbE and 1GbE Ports Growth 10
11 Ethernet & SONET/SDH Line-Rate Growth 2.5G 10G G 40/100 GbE Data Rate (Gbps) Mb/s 4x growth 622Mb/s 2.5 G 10 G 100M E 10x growth 1 GbE 10 GbE M E SONET ETHERNET Year 11
12 10G and 40G Linecard forecasts 12
13 100GbE and 40GbE standard (IEEE 802.3ba) will be completed by mid
14 R&D Environment Change Since AT&T Divestiture 14
15 Telecom infrastructure change since Bell System divestiture in 1984 AT&T 1984 AT&T Long Distance SW Bell Pacific Telesis American Information Technologies Bell South Bell Atlantic Nynex US West Indiana Bell 1993 Michigan Bell Ohio Bell Wisconsin Bell Illinois Bell MCI 1997 GTE 1984 NW Bell Pacific NW Bell Moutain States T&T 2001 SBC 1999 Ameritech Vodaphone Airtouch PrimeCo US West Commun AT&T Wireless Cingular AT&T Verizon Qwest 15
16 1984 ~ 1990 Technology-Driven R&D Engineering-Driven R&D USA Europe - Optical Component R&D - DFB laser - High-speed receivers - Optical amplifiers M - OEIC (silicon on silica) - Optical transmission System R&D - Direct-detection Gb/s systems - Coherent-detection Gb/s systems - Subcarrier-multiplexed analog systems M M Japan 16
17 R&D Mindset (1984~1990) Calculation Simulation Experiment 17
18 1990 ~ 1999 (I) Market-Driven R&D Engineering-Driven R&D USA Europe - Optical Component R&D - EDFA - 2.5G and 10G transceivers - OEIC M - Optical transmission System R&D - ULH direct-detection DWDM systems - Coherent-detection DWDM systems M - Subcarrier-multiplexed analog systems (Sub-system and system products) Japan 18
19 1990 ~ 1999 (II) Market-Driven R&D Engineering-Driven R&D USA Europe - Optical Component R&D - EDFA - 2.5G and 10G transceivers - OEIC M - Optical transmission System R&D - ULH direct-detection DWDM systems - Coherent-detection DWDM systems M - Subcarrier-multiplexed analog systems Japan CIENA Corvis 19
20 2000 ~ present Market-Driven R&D Engineering-Driven R&D North America (startup-driven innovations) Europe - Optical Component R&D -OEIC (InP) -OEIC (Silicon) M Japan -10G equalizer - Optical transmission System R&D - ROADM - DSP and Coherent-detection DWDM systems M Startups and big-company R&D driven 20
21 Examples due to R&D attitude change DFB laser Tunable laser 3 US companies 1 European company 0 Japanese company OADM ROADM 7 US companies 0 European company 1 Japanese company 21
22 ROI-Justifiable R&D: Innovation + Business Sense 18 months ~ 2 years New to the World? Entire New new to The market World? New product lines? Additions to existing products Improvement/ Revision/ Cost-down Allows a company to enter an established market Supplement a company s established product line Improved performance. Greater perceived value. Cost reduction. Product Re-positioning Targeting new markets 22
23 A cycle from technology to services YouTube, MySpace, SecondLife, ebay, Amazon, etc. Services Metro, LH Broadband access Market Standard Product Engineering DWDM, Ethernet, ROADM, Switch/router, etc. Proof-of-concept Technology 23
24 Expertise and Talents Required Market-driven telecom R&D Creativity in bandwidth-demanding services Innovation in operational flexibility and efficiency (tunable laser, ROADM, etc.) Innovation in user interface and user friendliness Sensitivity to market trends Flat organization (i.e., start-ups) Engineering-driven telecom R&D Follow standards Step-by-step qualification procedure Engineering Discipline Technology-driven telecom R&D Rigorous theoretical and experimental verification Physical insights 24
25 Standard-Body Driven R&D Volume Driven R&D 25
26 Example I: Optical transceiver modules Price War SFP XFP 300pin SFF MSA 300pin 40G SFP+ XFP-E 300pin MSA 26
27 Example II: PON ONU and OLT modules GPON/GEPON 10G PON WPON SONET/SDH GbE/10GbE 100GbE 27
28 Implications to Taiwan s Optical Fiber R&D Current status Mainly OEM manufacturing Future Niche R&D innovation to create values Standard-body driven R&D FTTH/FTTC Front-end & academic R&D Teaming up with a common goal (sharing resources) Take advantage of the strength of Taiwan IC OEIC based on Silicon technology DSP-based soft optical fiber systems ADC, DAC, DSP 28
29 Thank You! 29
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