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The Market for Optical Network Components

Product Type: Market Research Report
Published by: BCC Research
Published: February 2007
Product Code: R2-1241
Description

REPORT HIGHLIGHTS
- The total global market for optical network processing unit purchases was worth more than $2.1 billion in 2005 and over $2.2 billion in 2006. At a compound annual growth rate (CAGR) of 3.5%, this market will reach almost $2.7 billion by 2011.
- NPU optical network components have the greatest growth potential through the forecast period. In 2006 these component purchases totaled $355 million and at a CAGR of 5.4% will grow to $461 million by 2011.
- Backplane optical network component purchases held the highest share of the market through the forecast period. In 2006 these purchases totaled $952 million; over 42% of the market. By 2011 the value will grow to more than $1.1 billion, maintaining its 42% market share.

INTRODUCTION

The Information Age has clearly arrived. Increasingly, businesses and consumers communicate in real time. No longer are there any delays when individuals need to pick up messages at home or the office. Information travels quickly from the source to multiple destinations, whether it is a living room, a branch office, an automobile, or a combat unit in the Middle East. Networks have made it possible for companies and individuals to communicate so effectively. They have become faster, less expensive, and simpler to deploy. Businesses and individuals have developed new applications to take advantage of high-speed, multimedia-friendly transmissions. Not only are users able to speak to one another in real time, but they are also able to instantly exchange information from simple items like a weather report or a sports score to complex files and images. Equipment vendors are integrating networking components into a wide range of products. They have branched out from PCs and now include them in IP phones, PDAs (personal digital assistants), and laptop computers. These benefits are starting to be enhanced so that inanimate objects like a soft drink machine or a station on an assembly line can communicate in real time as well. In sum, just about every type of device is being connected to business and consumer networks.

Behind these new networking advances is an ever expanding array of semiconductors. Advances in wafer and silicon technology have enabled chip manufacturers to squeeze complex functions onto smaller and smaller spaces. They have also been able to put more and more functionality into these chips. As a result, network chips continue to be an area of prime interest for semiconductor suppliers. Because these new semiconductors offer users a number of benefits-more functionality, simpler deployment, and support for higher speeds-demand for them from network equipment suppliers has been rising.

This report will examine the silicon used to connect an ever growing array of devices, from complex servers to next-generation phones, to telecommunications networks. After defining the different market factors (the impact of wireless networking, the growth of the Internet, the use of Network Processing Units (NPUs), the importance of Multiprotocol Label Switching (MPLS), and the significance of future network growth), the report analyzes and forecasts market trends in each segment of the optical semiconductor market, delineates technology trends, and identifies market leaders. Long-term economic, business, and other macro issues raised by these trends are also analyzed.

The report outlines immediate and long-term commercial opportunities for vendors interested in delivering network semiconductors. Key product segments covered include spending on NPU, System on a Chip (SOC), backplane, and transceivers at a variety of speeds from 52M bps to 10G gigabits per second. In addition, the report examines the factors fueling the growing opportunity in these market segments and features a comprehensive look at emerging developments that may impact the optical network component market.

The text includes crisp explanations of the various technologies used in optical networks, easy-to-follow discussions about the level of maturity of the different technologies, and descriptions of the steps that need to be taken so that use of these products and their associated services can become more common. By incorporating data about past purchases, examining new user requirements, and including the perspectives of key industry insiders, sales forecasts and projections are made through the year 2011. The projections include the number of individuals using the services, revenues generated by them, and anticipated growth rates for products supporting a variety of transmission speeds.

SCOPE OF STUDY

The scope of this report is broad, and contains:
- An overview of the global optical network components market, with historic and emerging business usage trends, market demographics, government regulatory issues, and expenditures for technology, products, and applications.
- Detailed market forecasts for various applications, including NPU optical network components, SOC optical network components, transceiver network components, and backplane network components, with compound annual growth rates and five-year projections through 2011
- An important technology review that discusses critical developments and potential trends in the upcoming market, as well as a detailed analysis of patents over the past few decades
- Company profiles and detailed background information for all the major players in the industry.

METHODOLOGY AND INFORMATION SOURCES

Preparation of this report involved in-depth study and critical analysis of published data from a wide variety of world economic agencies, U.S. government, and private company sources. Industry projections have been made by BCC based on original studies of economic, social, and demographic information, as well as on critical examination of projections by industry analysts and those found in public sources. Information included in the report comes from primary BCC research, input from key suppliers in the various market segments, and reports from organizations such as the U.S. Department of Commerce, The World Trade Organization, the 10G Ethernet Alliance, the Wi-Fi Alliance, the Institute of Electrical and Electronic Engineers, and the Internet Engineering Task Force. The projections are based on anticipated growth in the current base of network users, the emergence of new optical market sectors, movement among existing network users from low speed to higher speed options, the availability of new networking options throughout the world, and a push by suppliers to wire more devices in the home as well in business.

Another factor is the never-ending improvement in silicon design. When new network components are first shipped, they sell at their highest price. Typically, pricing erodes from 5% to 20% per year depending on how long the components have been shipping. The higher price drops are associated with newer technology and vendors can make up for lower pricing by increasing volume. The lower end of the spectrum occurs with mature products; here vendors need to squeeze out costs by reducing expenses or improving production.

Since segments of the market such as lower-speed optical connections are mature and stable, vendors have been examining new ways to leverage their technology. Markets such as home networking offer them those opportunities. The need for higher speed network options corresponds to the never-ending delivery of faster, more powerful computer systems. As companies and individuals take advantage of these advances, they find that their network connections slow down data transmissions, which reduces productivity. Consequently, they are looking to upgrade to faster networking options. Vendors have shipped more than billions of wired connections and hundreds of millions of wireless connections. Software suppliers are delivering products that enable users to work with larger, more complex applications such as voice and video. Consequently, the volume of data transmitted over telecommunications continues to rise. Carriers need more bandwidth as well as more flexible network equipment in order to support their services. The ongoing migration from lower speed to higher speed connections provides optical network component suppliers with a recurring revenue stream. In addition, lower product pricing stemming from increased competition among suppliers has been expanding the market, so more businesses, OEMs, and consumers can now afford additional network solutions.

The market for optical network silicon will be healthy in emerging market segments such as 10G bps silicon and some of the potential revenue increases that vendors would like to reap will be offset by declining prices stemming from intense competition. Silicon vendors have been lowering the price of their products by streamlining manufacturing processes, moving facilities to inexpensive labor markets such as China, and improving the design process. The revenue projections are based on a continued worldwide growth in consumer and business spending of 2%, which translates into expansion of numerous product categories, including the use of networking products. One item of caution, the projections could be lower if the world economy slips into a recession or a depression, events that are possible given the volatility in areas such as the Middle East.

Table of Contents
INTRODUCTION

STUDY GOALS AND OBJECTIVES

REASONS FOR DOING THE STUDY

CONTRIBUTIONS OF THE STUDY

SCOPE AND FORMAT

METHODOLOGY AND INFORMATION SOURCES

ANALYST CREDENTIALS

RELATED BCC REPORTS

BCC ONLINE SERVICES

DISCLAIMER

EXECUTIVE SUMMARY

SUMMARY TABLE WORLDWIDE OPTICAL MARKET SEGMENT

REVENUES, THROUGH 2011 ($ MILLIONS)

SUMMARY FIGURE WORLDWIDE OPTICAL MARKET SEGMENT

REVENUES, 2004-2011 ($ MILLIONS)

OVERVIEW

BUSINESSES EMBRACE NETWORKING FUNCTIONS

TABLE 1 TYPICAL END USER DATA TRANSMISSION THROUGH 2011 (KILOBITS PER SECOND)

FIGURE 1 TYPICAL END USER DATA TRANSMISSION, 2004-2011 (KILOBITS PER SECOND)

BUSINESSES EMBRACE NETWORKING … (CONTINUED)

CONSUMERS ADOPT HIGH BANDWIDTH APPLICATIONS

DIGITAL HOME MEDIA

LOCAL AREA NETWORKS

ETHERNET

FIGURE 2 ETHERNET USAGE BY APPLICATION, 2005 (%)

UNTETHERED NETWORKING

TABLE 2 PER PORT WLAN PRICING TRENDS, THROUGH 2011 ($)

FIGURE 3 PER PORT WLAN PRICING TRENDS, 2004-2011 ($)

WEB AT HOME

CHALLENGES AT HOME

WIRELESS LAN TAKES OFF

WLAN OPTIONS CONTINUE TO GROW

MOVE TO 100M WLAN STANDARD HITS A SNAG

MOVE TO 100M WLAN STANDARD … (CONTINUED)

FIGURE 4 SHARE OF THE MOST POPULAR WIRELESS WAN

NETWORK STANDARDS, 2005 (%)

ENTERPRISES LARGE AND SMALL EMBRACE WLANS

INTEROFFICE CONNECTIVITY

REDUCED IT COSTS

CONTINGENCY PLANNING

HOT SPOTS CATCH FIRE

HOT SPOTS CATCH FIRE (CONTINUED)

MUNICIPAL WI-FI HOT SPOT NETWORKS TAKE HOLD

TABLE 3 NUMBER OF U.S. CITIES DEPLOYING MUNICIPAL WI-FI NETWORKS, THROUGH 2011

FIGURE 5 NUMBER OF U.S. CITIES DEPLOYING MUNICIPAL WI-FI NETWORKS, 2004-2011

WI-FI HOT SPOT USAGE SPREADS

TABLE 4 WORLDWIDE DEPLOYMENTS OF WI-FI HOT SPOTS, THROUGH 2011

FIGURE 6 WORLDWIDE DEPLOYMENTS OF WI-FI HOT SPOTS, 2004-2011

THE END-USER INFLUX

THE GLOBAL REACH OF TELECOMMUNICATIONS SERVICES

TABLE 5 NUMBER OF INTERNET USERS WORLDWIDE, 1995 TO JUNE 2006 (NUMBERS IN MILLIONS)

TABLE 5 (CONTINUED)

THE INTERNET’S IMPACT ON NETWORK TRAFFIC

TABLE 6 U.S. INTERNET BACKBONE TRAFFIC PATTERNS, 1990-

2005 (TB/MONTH)

TABLE 6 (CONTINUED)

INTERNET USE IS LIMITED TO SPECIFIC AREAS

TABLE 7 INTERNET USAGE STATISTICS BY WORLD REGION, 2005

WIRELESS NETWORKS START TO BOOM

Wireless Networks Start to Boom (Continued)

Wireless Networks Start to Boom (Continued)

Wireless Networks Start to Boom (Continued)

FIGURE 7 WIRELESS USAGE PATTERNS, 2005 (%)

TABLE 8 CELLULAR NETWORK SUBSCRIBER GROWTH, THROUGH

2011 (MILLIONS)

FIGURE 8 CELLULAR NETWORK SUBSCRIBER GROWTH, 2004-2011

($ MILLIONS)

TABLE 9 TOP TEN WIRELESS CARRIERS BY NUMBER OF SUBSCRIBERS, 2005 (MILLIONS)

THE IMPACT ON TELECOM NETWORKS

HOW CARRIERS CAN MEET RISING TRAFFIC DEMANDS WITH

NEXT-GENERATION NETWORK INFRASTRUCTURES

HOW CARRIERS CAN MEET …(CONTINUED)

HOW CARRIERS CAN MEET …(CONTINUED)

HOW CARRIERS CAN MEET …(CONTINUED)

HOW CARRIERS CAN MEET …(CONTINUED)

HOW CARRIERS CAN MEET …(CONTINUED)

HOW CARRIERS CAN MEET …(CONTINUED)

HOW CARRIERS CAN MEET …(CONTINUED)

THE MOVE TO OPTICAL NETWORKS

REQUIREMENTS FOR OPTICAL EQUIPMENT

REQUIREMENTS FOR … (CONTINUED)

REQUIREMENTS FOR … (CONTINUED)

WDM IN THE WAN

OPTICAL CROSS-CONNECTS

PROTECTION SWITCHING

OPTICAL ADD/DROP MULTIPLEXING

OPTICAL SIGNAL MONITORING

NETWORK PROVISIONING

OPTICAL SWITCH FABRICS

Optomechanical Switches

Microelectromechanical System Devices

Microelectromechanical System … (Continued)

Electrooptic Switches

Thermooptic Switches

Liquid-Crystal Switches

Bubble Switches

Acoustooptic Switches

Semiconductor Optical Amplifier Switches

Semiconductor Optical (Continued)

Semiconductor Optical Amplifier … (Continued)

Semiconductor Optical (Continued)

OPTICAL PACKET SWITCHING

ISSUES CONCERNING OPTICAL PACKET SWITCHING

Issues Concerning Optical Packet Switching (Continued)

CONTENTION RESOLUTION

Buffering

Buffering (Continued)

Deflection Routing

Wavelength Conversion

PACKET SWITCH ARCHITECTURES

General

Shared Wavelength Converters

Limited-Range Wavelength Converters

KEOPS (KEys to Optical Packet Switching)

The Data-Vortex Packet Switch

The Data-Vortex Packet Switch (Continued)

GENERALIZED MULTIPROTOCOL LABEL SWITCHING

TABLE 10 MPLS USAGE BY PERCENTAGE OF TELECOM TRAFFIC, THROUGH 2011 (%)

FIGURE 9 MPLS USAGE BY PERCENTAGE OF TELECOM TRAFFIC, 2004-2011 (%)

HOW MULTIPROTOCOL LABEL SWITCHING WORKS

How Multiprotocol Label Switching Works (Continued)

GENERALIZED MULTIPROTOCOL LABEL SWITCHING

Generalized Multiprotocol Label … (Continued)

Generalized Multiprotocol Label … (Continued)

Generalized Multiprotocol Label … (Continued)

AUTOMATICALLY SWITCHED OPTICAL NETWORK

Automatically Switched Optical Network (Continued)

OPTICAL BURST SWITCHING

NETWORK AND NODE ARCHITECTURE

BURST GENERATION

CHANNEL SCHEDULING

QOS SUPPORT

CONTENTION RESOLUTION

TERABIT BURST SWITCHING

THE NEXT STEP IN OPTICAL NETWORKING

OPTICAL DATA CONNECTIONS BROKEN DOWN

ITU HISTORY

ITU DEVELOPS OPTICAL NETWORK STANDARDS

THE MOVEMENT TO SONET

SONET Speeds

TABLE 11 SONET/SDH DATA RATES AND LINE SPEEDS

FIGURE 10 MOST POPULAR TELECOM DATA LINE SPEEDS BY MARKET SHARE, 2005 (%)

Asynchronous Transfer Mode

ATM Concepts

ATM Concepts (Continued)

WHY VIRTUAL CIRCUITS?

TYPES OF VIRTUAL CIRCUITS AND PATHS

FIGURE 11 STRUCTURE OF AN ATM CELL

SUCCESSES AND FAILURES OF ATM TECHNOLOGY

DENSE WAVELENGTH DIVISION MULTIPLEXING

THE RISE OF HYBRID CWDM/DWDM NETWORKING

THE RISE OF HYBRID CWDM/DWDM … (CONTINUED)

THE RISE OF HYBRID CWDM/DWDM … (CONTINUED)

THE RISE OF HYBRID CWDM/DWDM … (CONTINUED)

THE EMERGENCE OF 10 GIGABIT ETHERNET

THE EMERGENCE OF 10 GIGABIT … (CONTINUED)

NETWORKING COMPONENTS

CHANGING CHIP DESIGN

THE EMERGENCE OF NPUS

NEW ARCHITECTURE MAXIMIZES PERFORMANCE,

MINIMIZES DEPLOYMENT TIME

SELECTING NETWORKING PROCESSING SILICON

NPU VERSUS ASICS

PARTITIONING

Partitioning (Continued)

REMEMBER MEMORY

ONE PLUS ONE DOES NOT EQUAL TWO

APPLICATIONS FOR NPUS

NPU IN A CORE ROUTER

NPU IN A MULTI-SERVICE EDGE SWITCH

NPU IN AN ETHERNET AGGREGATION SYSTEM

NPU REVENUE RAMPS UP

TABLE 12 WORLDWIDE OPTICAL NETWORK PROCESSING

REVENUES, THROUGH 2011 ($ MILLION)

TABLE 13 WORLDWIDE OPTICAL NETWORK PROCESSING

REVENUES BY TYPE, THROUGH 2011 ($ MILLION)

NPU INTEREST SHIFTS TO 10G TRANSMISSION RATE

TABLE 14 WORLDWIDE NPU PRICING TRENDS BY UNIT, THROUGH 2011 ($)

FIGURE 12 WORLDWIDE NPU PRICING TRENDS BY UNIT, 2004-2011 ($)

FIGURE 13 TOP FIVE NETWORK PROCESSING UNIT VENDORS BY MARKET SHARE, 2005

FIGURE 13 (CONTINUED)

OC-1 NPUs

TABLE 15 WORLDWIDE OPTICAL OC-1 NETWORK PROCESSING UNIT REVENUES, THROUGH 2011 ($ MILLIONS)

FIGURE 14 WORLDWIDE OPTICAL OC-1 NETWORK PROCESSING UNIT REVENUES, 2004-2011 ($ MILLIONS)

FIGURE 15 MARKET SHARES OF TOP FIVE WORLDWIDE OC-1 OPTICAL NETWORK PROCESSING UNIT VENDORS, 2005 (%)

AGERE

AMCC

HIFN

INTEL

PMC

OC-3 NPUs

TABLE 16 WORLDWIDE OPTICAL OC-3 NETWORK PROCESSING

UNIT REVENUES, THROUGH 2011 ($ MILLIONS)

FIGURE 16 WORLDWIDE OPTICAL OC-3 NETWORK PROCESSING

UNIT REVENUES, 2004-2011 ($ MILLIONS)

FIGURE 17 MARKET SHARES OF TOP FIVE WORLDWIDE OPTICAL

OC-3 NETWORK PROCESSING UNIT VENDORS, 2005 (%)

AGERE

HIFN

INTEL

MINDSTREAM

PMC

OC-12 NPUs

TABLE 17 WORLDWIDE OPTICAL OC-12 NETWORK PROCESSING

UNIT REVENUES, THROUGH 2011 ($ MILLIONS)

FIGURE 18 WORLDWIDE OPTICAL OC-12 NETWORK PROCESSING

UNIT REVENUES, 2004-2011 ($ MILLIONS)

FIGURE 19 MARKET SHARES OF TOP FIVE WORLDWIDE OPTICAL

OC-12 NETWORK PROCESSING UNIT VENDORS, 2005 (%)

AMCC

BAY MICROSYSTEMS

EZCHIP

INFINEON

PMC

OC-48 NPUs

TABLE 18 WORLDWIDE OPTICAL OC-48 NETWORK PROCESSING

UNIT REVENUES, THROUGH 2011 ($ MILLIONS)

FIGURE 20 WORLDWIDE OC-48 OPTICAL NETWORK PROCESSING

UNIT REVENUES, 2004-2011 ($ MILLIONS)

FIGURE 21 MARKET SHARES OF TOP FIVE WORLDWIDE OPTICAL

OC-48 NETWORK PROCESSING UNIT VENDORS, 2005 (%)

FIGURE 21 (CONTINUED)

AMCC

BAY MICROSYSTEMS

INTEL

PMC

XCELERATED

OC-192 NPUS

TABLE 19 WORLDWIDE OPTICAL OC-192 NETWORK PROCESSING

UNIT REVENUES, THROUGH 2011 ($ MILLIONS)

FIGURE 22 WORLDWIDE OPTICAL OC-192 NETWORK PROCESSING

UNIT REVENUES, 2004-2011 ($ MILLIONS)

FIGURE 23 MARKET SHARES OF TOP FIVE WORLDWIDE OPTICAL

OC-192 NETWORK PROCESSING UNIT VENDORS, 2005 (%)

AMCC

BAY CHESAPEAKE

EZCHIP

PMC-SIERRA

XCELERATED

SYSTEM-ON-CHIP DESIGN STARTS TO TAKE HOLD

SYSTEM-ON-CHIP DESIGN STARTS TO TAKE HOLD

SOC IT TO ME

PROGRAMMABLE LOGIC DEVICES

ADDITIONAL SOLUTIONS

SOFTWARE FUNCTIONS

TABLE 20 WORLDWIDE OPTICAL SYSTEM-ON-CHIP REVENUES, THROUGH 2011 ($ MILLIONS)

TABLE 21 WORLDWIDE OPTICAL SYSTEM-ON-CHIP REVENUES BY TYPE OF UNIT, THOUGH 2011 ($ MILLIONS)

TABLE 22 WORLDWIDE SOC PRICING TRENDS BY UNIT, THROUGH 2011 ($)

FIGURE 24 WORLDWIDE SOC PRICING TRENDS BY UNIT, 2004-2011 ($)

FIGURE 25 TOP FIVE SOC SUPPLIERS BY MARKET SHARE 2005 (%)

OC-1 SOCs

TABLE 23 WORLDWIDE OPTICAL OC-1 SYSTEM-ON-CHIP

REVENUES, THROUGH 2011 ($ MILLIONS)

FIGURE 26 WORLDWIDE OPTICAL OC-1 SYSTEM-ON-CHIP

REVENUES, 2004-2011 ($ MILLIONS)

FIGURE 27 MARKET SHARES OF TOP FIVE WORLDWIDE OPTICAL

OC-1 SYSTEM-ON-CHIP VENDORS, 2005 (%)

AGERE

BROADCOM

FREESCALE

MARVELL

TEXAS INSTRUMENTS

OC-3 SOCs

TABLE 24 WORLDWIDE OPTICAL OC-3 SYSTEM-ON-CHIP

REVENUES, THROUGH 2011 ($ MILLIONS)

FIGURE 28 WORLDWIDE OPTICAL OC-3 SYSTEM-ON-CHIP

REVENUES, 2004- 2011 ($ MILLIONS)

FIGURE 29 MARKET SHARES OF TOP FIVE WORLDWIDE OPTICAL

OC-3 SYSTEM-ON-CHIP VENDORS, 2005 (%)

FIGURE 29 (CONTINUED)

AGERE

BROADCOM

FREESCALE

MARVELL

TEXAS INSTRUMENTS

OC-12 SOCs

TABLE 25 WORLDWIDE OPTICAL OC-12 SYSTEM-ON-CHIP

REVENUES, THROUGH 2011 ($ MILLIONS)

FIGURE 30 WORLDWIDE OPTICAL OC-12 SYSTEM-ON-CHIP

REVENUES, 2004-2011 ($ MILLIONS)

FIGURE 31 MARKET SHARES OF TOP FIVE WORLDWIDE OPTICAL

OC-12 SYSTEM-ON-CHIP VENDORS, 2005 (%)

BROADCOM

CENTILLION

FREESCALE

MARVELL

TEXAS INSTRUMENTS

OC-48 SOCs

TABLE 26 WORLDWIDE OPTICAL OC-48 SYSTEM-ON-CHIP

REVENUES, THROUGH 2011 ($ MILLIONS)

FIGURE 32 WORLDWIDE OPTICAL OC-48 SYSTEM-ON-CHIP

REVENUES, 2004-2011 ($ MILLIONS)

FIGURE 33 MARKET SHARES OF TOP FIVE WORLDWIDE OPTICAL

OC-48 SYSTEM-ON-CHIP VENDORS, 2005 (%)

FIGURE 33 (CONTINUED)

BROADCOM

FREESCALE

MYSTICOM

PMC

TEXAS INSTRUMENTS

OC-192 SOCs

TABLE 27 WORLDWIDE OPTICAL C-192 SYSTEM-ON-CHIP

REVENUES, THROUGH 2011 ($ MILLIONS)

FIGURE 34 WORLDWIDE OPTICAL C-192 SYSTEM-ON-CHIP

REVENUES, 2004-2011 ($ MILLIONS)

FIGURE 35 MARKET SHARES OF TOP FIVE WORLDWIDE OPTICAL

OC-192 SYSTEM-ON-CHIP VENDORS, 2005 (%)

BROADCOM

CENTILLION

FREESCALE

PMC-SIERRA

TEXAS INSTRUMENTS

TRANSCEIVERS

TABLE 28 WORLDWIDE OPTICAL TRANSCEIVER REVENUES, THROUGH 2011 ($ MILLIONS)

TABLE 29 WORLDWIDE OPTICAL TRANSCEIVER REVENUES, THROUGH 2011 ($ MILLIONS)

TABLE 30 WORLDWIDE TRANSCEIVER PRICING TRENDS BY UNIT, THROUGH 2011 ($)

FIGURE 36 WORLDWIDE TRANSCEIVER PRICING TRENDS BY UNIT, 2004-2011 ($)

FIGURE 37 TOP FIVE OPTICAL TRANSCEIVER VENDORS BY REVENUE, 2005 (%)

OC-1 TRANSCEIVERS

TABLE 31 WORLDWIDE OC-1 OPTICAL TRANSCEIVER REVENUE, THROUGH 2011 ($ MILLIONS)

FIGURE 38 WORLDWIDE OC-1 OPTICAL TRANSCEIVER REVENUE, 2004-2011 ($ MILLIONS)

FIGURE 39 MARKET SHARES OF TOP FIVE WORLDWIDE OPTICAL OC-1 TRANSCEIVER VENDORS, 2005 (%)

AGERE

BROADCOM

CENTILLIUM

INFINEON

MARVELL

OC-3 TRANSCEIVERS

TABLE 32 WORLDWIDE OPTICAL OC-3 TRANSCEIVER REVENUES, THROUGH 2011 ($ MILLIONS)

FIGURE 40 WORLDWIDE OPTICAL OC-3 TRANSCEIVER REVENUES, 2004-2011 ($ MILLIONS)

FIGURE 41 MARKET SHARES OF TOP FIVE WORLDWIDE OPTICAL OC-3 TRANSCEIVER VENDORS, 2005 (%)

AGERE

BROADCOM

CENTILLIUM

INFINEON

TEXAS INSTRUMENTS

OC-12 TRANSCEIVERS

TABLE 33 WORLDWIDE OPTICAL OC-12 TRANSCEIVER REVENUES, THROUGH 2011 ($ MILLIONS)

FIGURE 42 WORLDWIDE OPTICAL OC-12 TRANSCEIVER REVENUES, 2004-2011 ($ MILLIONS)

FIGURE 43 MARKET SHARES OF TOP FIVE WORLDWIDE OPTICAL OC-12 T5ANSCEIVER VENDORS, 2005 (%)

AGERE

BROADCOM

CENTILLIUM

INFINEON

TEXAS INSTRUMENTS

OC-48 TRANSCEIVERS

TABLE 34 WORLDWIDE OPTICAL OC-48 TRANSCEIVER REVENUES, THROUGH 2011 ($ MILLIONS)

FIGURE 44 WORLDWIDE OPTICAL OC-48 TRANSCEIVER REVENUES, 2004-2011 ($ MILLIONS)

FIGURE 45 MARKET SHARES OF TOP FIVE WORLDWIDE OPTICAL OC-48 TRANSCEIVER VENDORS, 2005 (%)

AGERE

CENTILLIUM

INFINEON

MARVELL

TEXAS INSTRUMENTS

OC-192 TRANSCEIVERS

TABLE 35 WORLDWIDE OPTICAL OC-192 TRANSCEIVER REVENUES, THROUGH 2011 ($ MILLIONS)

FIGURE 46 WORLDWIDE OPTICAL OC-192 TRANSCEIVER REVENUES, 2004-2011 ($ MILLIONS)

FIGURE 47 MARKET SHARES OF TOP FIVE WORLDWIDE OPTICAL OC-192 TRANSCEIVER VENDORS, 2005 (%)

BROADCOM

CENTILLION

MARVEL

INFINEON

TEXAS INSTRUMENTS

BACKPLANE

ATCA

MIGRATING TO ADVANCED TELECOM COMPUTING

ARCHITECTURE

THE NEED FOR SPEED

The Need for Speed (Continued)

COMPLIANCE

MORE STANDARDS WORK TO COME

More Standards Work To Come (Continued)

TABLE 36 WORLDWIDE OPTICAL BACKPLANE REVENUES, THROUGH 2011 ($ MILLIONS)

TABLE 37 WORLDWIDE OPTICAL BACKPLANE REVENUES BY UNIT, THROUGH 2011 ($ MILLIONS)

TABLE 38 WORLDWIDE BACKPLANE PRICING TRENDS BY UNIT, THROUGH 2011 ($)

FIGURE 48 WORLDWIDE BACKPLANE PRICING TRENDS BY UNIT, 2004-2011 ($)

FIGURE 49 TOP FIVE OPTICAL BACKPLANE VENDORS BY REVENUE, 2005 (%)

FIGURE 49 (CONTINUED)

OC-1 BACKPLANE

TABLE 39 WORLDWIDE OC-1 BACKPLANE REVENUES, THROUGH 2011 ($ MILLIONS)

FIGURE 50 WORLDWIDE BACKPLANE REVENUES, 2004-2011 ($ MILLIONS)

FIGURE 51 MARKET SHARES OF TOP FIVE WORLDWIDE OPTICAL OC-1 BACKPLANE VENDORS, 2005 (%)

AGERE

AMCC

INFINEON

TEXAS INSTRUMENTS

VITESSE

OC-3 BACKPLANE

TABLE 40 WORLDWIDE OPTICAL OC-3 BACKPLANE REVENUES, THROUGH 2011 ($ MILLIONS)

FIGURE 52 WORLDWIDE OPTICAL OC-3 BACKPLANE REVENUES, 2004-2011 ($ MILLIONS)

FIGURE 53 MARKET SHARES OF TOP FIVE WORLDWIDE OPTICAL OC-3 BACKPLANE VENDORS, 2005 (%)

AGERE

AMCC

BROADCOM

INFINEON

TEXAS INSTRUMENTS

OC-12 BACKPLANE

TABLE 41 WORLDWIDE OPTICAL OC-12 BACKPLANE REVENUES, THROUGH 2011 ($ MILLIONS)

FIGURE 54 WORLDWIDE OPTICAL OC-12 BACKPLANE REVENUES, 2004-2011 ($ MILLIONS)

FIGURE 55 MARKET SHARES OF TOP FIVE WORLDWIDE OPTICAL OC-12 BACKPLANE VENDORS, 2005 (%)

FIGURE 55 (CONTINUED)

AGERE

AMCC

FREESCALE

INFINEON

TEXAS INSTRUMENTS

OC-48 BACKPLANE

TABLE 42 WORLDWIDE OPTICAL OC-48 BACKPLANE REVENUES, THROUGH 2011 ($ MILLIONS)

FIGURE 56 WORLDWIDE OPTICAL OC-48 BACKPLANE REVENUES, 2004-2011 ($ MILLIONS)

FIGURE 57 MARKET SHARES OF TOP FIVE WORLDWIDE OPTICAL OC-48 BACKPLANE VENDORS, 2005 (%)

AGERE

AMCC

FREESCALE

INFINEON

TEXAS INSTRUMENTS

VITESSE

OC-192 BACKPLANE

TABLE 43 WORLDWIDE OPTICAL OC-192 BACKPLANE REVENUES, THROUGH 2011 ($ MILLIONS)

FIGURE 58 WORLDWIDE OPTICAL OC-192 BACKPLANE REVENUES, 2004-2011 ($ MILLIONS)

FIGURE 59 MARKET SHARES OF TOP FIVE WORLDWIDE OPTICAL OC-192 BACKPLANE VENDORS, 2005 (%)

FIGURE 59 (CONTINUED)

AGERE

AMCC

FREESCALE

INFINEON

TEXAS INSTRUMENTS

WHAT’S NEXT?

MEMS TECHNOLOGY ADVANCES

MEMS TECHNOLOGY ADVANCES (CONTINUED)

MEMS TECHNOLOGY ADVANCES (CONTINUED)

MEMS TECHNOLOGY ADVANCES (CONTINUED)

MEMS TECHNOLOGY ADVANCES (CONTINUED)

MEMS TECHNOLOGY ADVANCES (CONTINUED)

MEMS IN A 3-D CONFIGURATION

MEMS in a 3-D Configuration (Continued)

MEMS IN A 3-D CONFIGURATION

OPTICAL CHIP-TO-CHIP CONNECTIONS ADVANCE

MOVEMENT TO HIGHER SPEED NETWORKS

MOVEMENT TO HIGHER SPEED NETWORKS

(CONTINUED)

FIGURE 60 TYPICAL 4-BYTE FRAME USED IN OC-768

TRANSMISSIONS

HIGH-CAPACITY REPEATER TECHNOLOGY

High-Capacity Repeater Technology (Continued)

NANOELECTRONICS EMERGE

NANOELECTRONICS EMERGE (CONTINUED)

NANOELECTRONICS EMERGE (CONTINUED)

MOVING AWAY FROM DISCRETE DEVICES

NANOSTRUCTURE-BASED PLATFORM ARCHITECTURE

NANOIMPRINT LITHOGRAPHY

Nanoimprint Lithography (Continued)

CHALLENGES IN NANOTECHNOLOGY

THE ADVANTAGES OF NANOIMPRINTS

The Advantages of Nanoimprints (Continued)

OPTICAL WIRELESS LOOMS ON HORIZON

PLACEMENT OF WIRELESS OPTICAL LINES

Placement of Wireless Optical Lines (Continued)

WIRELESS OPTICAL ADVANTAGES

APPENDIX — LIST OF ABBREVIATIONS

APPENDIX — LIST OF ABBREVIATIONS

APPENDIX — LIST OF ABBREVIATIONS (CONTINUED)

APPENDIX — LIST OF ABBREVIATIONS

APPENDIX — LIST OF ABBREVIATIONS

APPENDIX — LIST OF ABBREVIATIONS

LIST OF TABLES

SUMMARY TABLE WORLDWIDE OPTICAL MARKET SEGMENT REVENUES, THROUGH 2011 ($ MILLIONS)

TABLE 1 TYPICAL END USER DATA TRANSMISSION THROUGH 2011 (KILOBITS PER SECOND)

TABLE 2 PER PORT WLAN PRICING TRENDS, THROUGH 2011 ($)

TABLE 3 NUMBER OF U.S. CITIES DEPLOYING MUNICIPAL WI-FI NETWORKS, THROUGH 2011

TABLE 4 WORLDWIDE DEPLOYMENTS OF WI-FI HOT SPOTS, THROUGH 2011

TABLE 5 NUMBER OF INTERNET USERS WORLDWIDE, 1995 TO JUNE 2006 (NUMBERS IN MILLIONS)

TABLE 6 U.S. INTERNET BACKBONE TRAFFIC PATTERNS, 1990-2005 (TB/MONTH)

TABLE 7 INTERNET USAGE STATISTICS BY WORLD REGION, 2005

TABLE 8 CELLULAR NETWORK SUBSCRIBER GROWTH, THROUGH 2011 (MILLIONS)

TABLE 9 TOP TEN WIRELESS CARRIERS BY NUMBER OF SUBSCRIBERS, 2005 (MILLIONS)

TABLE 10 MPLS USAGE BY PERCENTAGE OF TELECOM TRAFFIC, THROUGH 2011 (%)

TABLE 11 SONET/SDH DATA RATES AND LINE SPEEDS

TABLE 12 WORLDWIDE OPTICAL NETWORK PROCESSING REVENUES, THROUGH 2011 ($ MILLION)

TABLE 13 WORLDWIDE OPTICAL NETWORK PROCESSING REVENUES BY TYPE, THROUGH 2011 ($ MILLION)

TABLE 14 WORLDWIDE NPU PRICING TRENDS BY UNIT, THROUGH 2011 ($)

TABLE 15 WORLDWIDE OPTICAL OC-1 NETWORK PROCESSING UNIT REVENUES, THROUGH 2011 ($ MILLIONS)

TABLE 16 WORLDWIDE OPTICAL OC-3 NETWORK PROCESSING UNIT REVENUES, THROUGH 2011 ($ MILLIONS)

TABLE 17 WORLDWIDE OPTICAL OC-12 NETWORK PROCESSING UNIT REVENUES, THROUGH 2011 ($ MILLIONS)

TABLE 18 WORLDWIDE OPTICAL OC-48 NETWORK PROCESSING UNIT REVENUES, THROUGH 2011 ($ MILLIONS)

TABLE 19 WORLDWIDE OPTICAL OC-192 NETWORK PROCESSING UNIT REVENUES, THROUGH 2011 ($ MILLIONS)

TABLE 20 WORLDWIDE OPTICAL SYSTEM-ON-CHIP REVENUES, THROUGH 2011 ($ MILLIONS)

TABLE 21 WORLDWIDE OPTICAL SYSTEM-ON-CHIP REVENUES BY TYPE OF UNIT, THOUGH 2011 ($ MILLIONS)

TABLE 22 WORLDWIDE SOC PRICING TRENDS BY UNIT, THROUGH 2011 ($)

TABLE 23 WORLDWIDE OPTICAL OC-1 SYSTEM-ON-CHIP REVENUES, (THROUGH 2011 ($ MILLIONS)

TABLE 24 WORLDWIDE OPTICAL OC-3 SYSTEM-ON-CHIP REVENUES, THROUGH 2011 ($ MILLIONS)

TABLE 25 WORLDWIDE OPTICAL OC-12 SYSTEM-ON-CHIP REVENUES, THROUGH 2011 ($ MILLIONS)

TABLE 26 WORLDWIDE OPTICAL OC-48 SYSTEM-ON-CHIP REVENUES, THROUGH 2011 ($ MILLIONS)

TABLE 27 WORLDWIDE OPTICAL C-192 SYSTEM-ON-CHIP REVENUES, THROUGH 2011 ($ MILLIONS)

TABLE 28 WORLDWIDE OPTICAL TRANSCEIVER REVENUES, THROUGH 2011 ($ MILLIONS)

TABLE 29 WORLDWIDE OPTICAL TRANSCEIVER REVENUES, THROUGH 2011 ($ MILLIONS)

TABLE 30 WORLDWIDE TRANSCEIVER PRICING TRENDS BY UNIT, THROUGH 2011 ($)

TABLE 31 WORLDWIDE OC-1 OPTICAL TRANSCEIVER REVENUE, THROUGH 2011 ($ MILLIONS)

TABLE 32 WORLDWIDE OPTICAL OC-3 TRANSCEIVER REVENUES, THROUGH 2011 ($ MILLIONS)

TABLE 33 WORLDWIDE OPTICAL OC-12 TRANSCEIVER REVENUES, THROUGH 2011 ($ MILLIONS)

TABLE 34 WORLDWIDE OPTICAL OC-48 TRANSCEIVER REVENUES, THROUGH 2011 ($ MILLIONS)

TABLE 35 WORLDWIDE OPTICAL OC-192 TRANSCEIVER REVENUES, THROUGH 2011 ($ MILLIONS)

TABLE 36 WORLDWIDE OPTICAL BACKPLANE REVENUES, THROUGH 2011 ($ MILLIONS)

TABLE 37 WORLDWIDE OPTICAL BACKPLANE REVENUES BY UNIT, THROUGH 2011 ($ MILLIONS)

TABLE 38 WORLDWIDE BACKPLANE PRICING TRENDS BY UNIT, THROUGH 2011 ($)

TABLE 39 WORLDWIDE OC-1 BACKPLANE REVENUES, THROUGH 2011 ($ MILLIONS)

TABLE 40 WORLDWIDE OPTICAL OC-3 BACKPLANE REVENUES, THROUGH 2011 ($ MILLIONS)

TABLE 41 WORLDWIDE OPTICAL OC-12 BACKPLANE REVENUES, THROUGH 2011 ($ MILLIONS)

TABLE 42 WORLDWIDE OPTICAL OC-48 BACKPLANE REVENUES, THROUGH 2011 ($ MILLIONS)

TABLE 43 WORLDWIDE OPTICAL OC-192 BACKPLANE REVENUES, THROUGH 2011 ($ MILLIONS)

LIST OF FIGURES

SUMMARY FIGURE WORLDWIDE OPTICAL MARKET SEGMENT REVENUES, 2004-2011 ($ MILLIONS)

FIGURE 1 TYPICAL END USER DATA TRANSMISSION, 2004-2011 (KILOBITS PER SECOND)

FIGURE 2 ETHERNET USAGE BY APPLICATION, 2005 (%)

FIGURE 3 PER PORT WLAN PRICING TRENDS, 2004-2011 ($)

FIGURE 4 SHARE OF THE MOST POPULAR WIRELESS WAN NETWORK STANDARDS, 2005 (%)

FIGURE 5 NUMBER OF U.S. CITIES DEPLOYING MUNICIPAL WI-FI NETWORKS, 2004-2011

FIGURE 6 WORLDWIDE DEPLOYMENTS OF WI-FI HOT SPOTS, 2004-2011

FIGURE 7 WIRELESS USAGE PATTERNS, 2005 (%)

FIGURE 8 CELLULAR NETWORK SUBSCRIBER GROWTH, 2004-2011 ($ MILLIONS)

FIGURE 9 MPLS USAGE BY PERCENTAGE OF TELECOM TRAFFIC, 2004-2011 (%)

FIGURE 10 MOST POPULAR TELECOM DATA LINE SPEEDS BY MARKET SHARE, 2005 (%)

FIGURE 11 STRUCTURE OF AN ATM CELL

FIGURE 12 WORLDWIDE NPU PRICING TRENDS BY UNIT, 2004-2011 ($)

FIGURE 13 TOP FIVE NETWORK PROCESSING UNIT VENDORS BY MARKET SHARE, 2005

FIGURE 14 WORLDWIDE OPTICAL OC-1 NETWORK PROCESSING UNIT REVENUES, 2004-2011 ($ MILLIONS)

FIGURE 15 MARKET SHARES OF TOP FIVE WORLDWIDE OC-1 OPTICAL NETWORK PROCESSING UNIT VENDORS, 2005 (%)

FIGURE 16 WORLDWIDE OPTICAL OC-3 NETWORK PROCESSING UNIT REVENUES, 2004-2011 ($ MILLIONS)

FIGURE 17 MARKET SHARES OF TOP FIVE WORLDWIDE OPTICAL OC-3 NETWORK PROCESSING UNIT VENDORS, 2005 (%)

FIGURE 18 WORLDWIDE OPTICAL OC-12 NETWORK PROCESSING UNIT REVENUES, 2004-2011 ($ MILLIONS)

FIGURE 19 MARKET SHARES OF TOP FIVE WORLDWIDE OPTICAL OC-12 NETWORK PROCESSING UNIT VENDORS, 2005 (%)

FIGURE 20 WORLDWIDE OC-48 OPTICAL NETWORK PROCESSING UNIT REVENUES, 2004-2011 ($ MILLIONS)

FIGURE 21 MARKET SHARES OF TOP FIVE WORLDWIDE OPTICAL OC-48 NETWORK PROCESSING UNIT VENDORS, 2005 (%)

FIGURE 22 WORLDWIDE OPTICAL OC-192 NETWORK PROCESSING UNIT REVENUES, 2004-2011 ($ MILLIONS)

FIGURE 23 MARKET SHARES OF TOP FIVE WORLDWIDE OPTICAL OC-192 NETWORK PROCESSING UNIT VENDORS, 2005 (%)

FIGURE 24 WORLDWIDE SOC PRICING TRENDS BY UNIT, 2004-2011 ($)

FIGURE 25 TOP FIVE SOC SUPPLIERS BY MARKET SHARE 2005 (%) FIGURE 26 WORLDWIDE OPTICAL OC-1 SYSTEM-ON-CHIP REVENUES, 2004-2011 ($ MILLIONS)

FIGURE 27 MARKET SHARES OF TOP FIVE WORLDWIDE OPTICAL OC-1 SYSTEM-ON-CHIP VENDORS, 2005 (%)

FIGURE 28 WORLDWIDE OPTICAL OC-3 SYSTEM-ON-CHIP REVENUES, 2004- 2011 ($ MILLIONS)

FIGURE 29 MARKET SHARES OF TOP FIVE WORLDWIDE OPTICAL OC-3 SYSTEM-ON-CHIP VENDORS, 2005 (%)

FIGURE 30 WORLDWIDE OPTICAL OC-12 SYSTEM-ON-CHIP REVENUES, 2004-2011 ($ MILLIONS)

FIGURE 31 MARKET SHARES OF TOP FIVE WORLDWIDE OPTICAL OC-12 SYSTEM-ON-CHIP VENDORS, 2005 (%)

FIGURE 32 WORLDWIDE OPTICAL OC-48 SYSTEM-ON-CHIP REVENUES, 2004-2011 ($ MILLIONS)

FIGURE 33 MARKET SHARES OF TOP FIVE WORLDWIDE OPTICAL OC-48 SYSTEM-ON-CHIP VENDORS, 2005 (%)

FIGURE 34 WORLDWIDE OPTICAL C-192 SYSTEM-ON-CHIP REVENUES, 2004-2011 ($ MILLIONS)

FIGURE 35 MARKET SHARES OF TOP FIVE WORLDWIDE OPTICAL OC-192 SYSTEM-ON-CHIP VENDORS, 2005 (%)

FIGURE 36 WORLDWIDE TRANSCEIVER PRICING TRENDS BY UNIT, 2004-2011 ($)

FIGURE 37 TOP FIVE OPTICAL TRANSCEIVER VENDORS BY REVENUE, 2005 (%)

FIGURE 38 WORLDWIDE OC-1 OPTICAL TRANSCEIVER REVENUE, 2004-2011 ($ MILLIONS)

FIGURE 39 MARKET SHARES OF TOP FIVE WORLDWIDE OPTICAL OC-1 TRANSCEIVER VENDORS, 2005 (%)

FIGURE 40 WORLDWIDE OPTICAL OC-3 TRANSCEIVER REVENUES, 2004-2011 ($ MILLIONS)

FIGURE 41 MARKET SHARES OF TOP FIVE WORLDWIDE OPTICAL OC-3 TRANSCEIVER VENDORS, 2005 (%)

FIGURE 42 WORLDWIDE OPTICAL OC-12 TRANSCEIVER REVENUES, 2004-2011 ($ MILLIONS)

FIGURE 43 MARKET SHARES OF TOP FIVE WORLDWIDE OPTICAL OC-12 T5ANSCEIVER VENDORS, 2005 (%)

FIGURE 44 WORLDWIDE OPTICAL OC-48 TRANSCEIVER REVENUES, 2004-2011 ($ MILLIONS)

FIGURE 45 MARKET SHARES OF TOP FIVE WORLDWIDE OPTICAL OC-48 TRANSCEIVER VENDORS, 2005 (%)

FIGURE 46 WORLDWIDE OPTICAL OC-192 TRANSCEIVER REVENUES, 2004-2011 ($ MILLIONS)

FIGURE 47 MARKET SHARES OF TOP FIVE WORLDWIDE OPTICAL OC-192 TRANSCEIVER VENDORS, 2005 (%)

FIGURE 48 WORLDWIDE BACKPLANE PRICING TRENDS BY UNIT, 2004-2011 ($)

FIGURE 49 TOP FIVE OPTICAL BACKPLANE VENDORS BY REVENUE, 2005 (%)

FIGURE 50 WORLDWIDE BACKPLANE REVENUES, 2004-2011 ($ MILLIONS)

FIGURE 51 MARKET SHARES OF TOP FIVE WORLDWIDE OPTICAL OC-1 BACKPLANE VENDORS, 2005 (%)

FIGURE 52 WORLDWIDE OPTICAL OC-3 BACKPLANE REVENUES, 2004-2011 ($ MILLIONS)

FIGURE 53 MARKET SHARES OF TOP FIVE WORLDWIDE OPTICAL OC-3 BACKPLANE VENDORS, 2005 (%)

FIGURE 54 WORLDWIDE OPTICAL OC-12 BACKPLANE REVENUES, 2004-2011 ($ MILLIONS)

FIGURE 55 MARKET SHARES OF TOP FIVE WORLDWIDE OPTICAL OC-12 BACKPLANE VENDORS, 2005 (%)

FIGURE 56 WORLDWIDE OPTICAL OC-48 BACKPLANE REVENUES, 2004-2011 ($ MILLIONS)

FIGURE 57 MARKET SHARES OF TOP FIVE WORLDWIDE OPTICAL OC-48 BACKPLANE VENDORS, 2005 (%)

FIGURE 58 WORLDWIDE OPTICAL OC-192 BACKPLANE REVENUES, 2004-2011 ($ MILLIONS)

FIGURE 59 MARKET SHARES OF TOP FIVE WORLDWIDE OPTICAL OC-192 BACKPLANE VENDORS, 2005 (%)

FIGURE 60 TYPICAL 4-BYTE FRAME USED IN OC-768 TRANSMISSIONS
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