451 market insight service 16 nov 2007 copyright 2007 the 451 group page 1 of 3 analyst: greg quick sector: networks & media finisar , one of the longtime players in fiber optics technology, has developed an optical cable package that incorporates technology that once required board space. laserwire could significantly lower the cost of 10gige serv er connectivity. the vendor has integrated the optical module into the cable connectors and so eliminated the need for the bulky and power-consuming cables that would be needed in a copper environment. in doing so, it's added ease of use to the optical market. fini sar sees its technology as providing savings in power, board space and cooling ? flash points that have contributed to slow adoption of the technology in the server space. the 451 take integrating the optical module into the cable connector is an approach that appears to have significant advantages over the current method of implementing optical connectivity (using optical modules not on the connectors). it also has price advantages over copper. if this strategy pans out as finisar hopes, the company could have a major hit on its hands. context finisar, a 19-year-old company, has evolved as its key markets have changed, looking elsewhere for business as its original space began drying up. primarily focused on the growing telecom fiber optics market for most of its existence, the company shifted direction when the bottom fell out of that space around 2001. new emphasis was put on storage, including fiber channel switches, host bus adapters and disk subsystems. high-speed lans, with lan switches and nic cards, were another new area for finisar. its offerings include optical components for storage area networks/lans and metro ethernet as well as transponders for telecom markets. and it has test instruments for the fiber channel, iscsi and gige markets. strategy the company has a clear goal with laserwire: to drive 10gige adoption in the datacenter and high-performance computing space. it sees applications for the technology in the server connectivity space both as a solution in the nic-to-switch space and for lan-on- motherboard implementations. the company has designed the device to support the existing ecosystem in that market, including macs, phys and switch fabrics. lasewire also supports existing optical modu les and electrical interfaces, thus lowering the cost of adoption. and laserwire can work in a mixed environment ? where it's used side by side with older optical technology ? so that a company can adopt it for its entire datacenter or just add it to selected portions. the vendor also sees laserwire as the answer to optical transceiver proliferation, with a handful of designs currently in use, including xenpak, xpak, x2, xfp and sfp+. finisar seeks to take the optical module out of optical connectivity 16 november 2007 ? impact report
451 market insight service 16 nov 2007 copyright 2007 the 451 group page 2 of 3 finisar primarily targets the copper-interconnect segment of the 10gige market, an area where many believe the long-term growth w ill come from. cx-4, the current mainstream technology, has had limited uptake because of such issues as limited distance capabilities unless additional components are added and concerns about port density. many have viewed the 10gbase-t market as the one that will drive 10gige into widespread adoption because of 10gige's relative ease of use and because it does not need optical modules, which soak up power, space and energy. the first-generation phys for this space have been relatively power hungry, often in excess of 10 watts, but a new generation is expected in 2008 that will address this issue by cutting power demand in half. copper has an advantage in that it is perceived as more reliable than optics. in most cases, if a copper connection fails on a switch, it can be replaced, while an optical burnout kills the entire switch. competition solarflare communications has just released its 10gbase-t offerings, and it has teamed up with accton technology to move the technology into the mainstream enterprise datacenter. keyeye communications has recently started developing for short-reach 10gbase-t applications. optical developers such as jds uniphase and mrv communications could also be affected if they find that in their existing ma rkets they start getting supplanted by laserwire, which doesn't need an optical module. strengths weaknesses t his is a very innovative approach that eliminates clutter, opens up board space and reduces power and heat issues ? all major concerns that have slowed adoption of large-scale 10gige installations. basing a key component of a datacenter?s connectivity on a relatively new approach from a single-source developer is always an issue for it managers. opportunities threats the lack of a cost-effective and efficient method to connect 10gige has slowed adoption of that technology. if finisar can deliver on its promise, it should tap into a huge market. the ability of competitors to counter with a similar elegant solution will be quickly tested. there are reports of rival solutions that also seek to eliminate the optical module from the board.
451 market insight service 16 nov 2007 copyright 2007 the 451 group page 3 of 3 about the 451 group the 451 group is a technology industry an alyst company focused on the business of enterprise it innovation. the company?s analysts provide critical and timely emerging-technology insight to clients at vendor, investor, services and end- user organizations ? insight that aids both strategic and tactical decision making for competitive advantage. the company?s services include the 451 market insight service, which delivers daily insight into emerging enterprise it markets; 451 techdealmaker, a weekly anal ysis service focused on forward-looking m& a within the enterprise it business; 451 special reports, which are produced on a periodic basis to an alyze key emerging enterprise it markets in greater depth; and 451 strategic counsel, the company?s analyst-inquiry program, which provides clients with direct access to 451 analysts. the company also produces via 451 events periodic industry su mmits and investor conferences that address opportunities and obstacles facing emerging enterprise it markets. the 451 group is headquartered in new york, with offices in key locations, including san francisco, london and boston. the company also operates tier 1 research ? an independen t division of the 451 group, headquartered in minneapolis ? which analyzes the financial and industry implications of de velopments impacting public and private companies within the it, communications and internet sectors. for additional information on the company or to apply fo r trial access to its services, go to: www.the451group.com
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