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| http://www.gilder.com/ | Issue 295.0/May 18,
2007
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HEADLINES:
- The
Week / ROADM Rage
- Friday
Feature / Digital Power’s Domain
- Friday Blogger Bonus / Stock Prices are Going Up
- Readings /
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The
Week /
ROADM Rage
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.
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Friday Feature / Digital Power’s Domain
Gilder Telecosm Forum Poster (5/14/07): I am wondering why Power-One (PWER) remains on the
“Telecosm Technologies” list.
George Gilder, Gilder
Telecosm Forum (5/14/07): This is an entire domain of new technology that we want to
pursue in coming years. Digital power will prevail in the emerging world of
complex systems-on-a-chip with diverse power needs. PWER still commands the
crucial intellectual property and critical path products.
That said, I am not recommending purchase of this ramshackle company to
anyone without a high risk tolerance.
Next
Inning’s Paul McWlliams (5/14/07): I don't believe that the
feature set that is the core of Z-One has value in these small and, mostly,
handheld systems that are being addressed by SoC technology. While these small
SoC addressed systems will integrate power control and power management (in
some cases, even battery control and battery management) on the
"mother-chip" and often couple this with a form of "point of
load" power handling technology, this is not PWER's market nor a market
that would gain benefit from core Z-One technology. As such, I don't see the
PWER differentiation as being valuable in the high volume applications that are
and will continue to be addressed by SoC technology.
Heck, to the best of my knowledge, PWER does not use Z-One in even its own
power supply designs, which in some cases can be fairly elaborate. This is not
a case of "don't trust a cook that won't eat his or her own dishes,"
but a good illustration that the technology is not universally appealing.
Over the last six months, I've written two fairly lengthy reports detailing how
and where we'll see both analog and RF technology that was once accomplished
with discrete chips pulled into the mother-chip. These are great illustrations
about how Moore's Law works differently in the analog and RF domains than it
does in the world of digital. In the digital world, Moore's Law is a fairly
constant and linear force, however, in the analog and RF worlds, it tends to
work in step functions that in some cases are very disruptive.
George Gilder, Gilder
Telecosm Forum (5/14/07): Excellent points, Paul. You are correct to point out that
Z-One does not now apply on these one-chip systems. My assumption is that over
time these one-chip systems will recapitulate the digital evolution of power on
boards and cards.
Next
Inning’s Paul McWlliams (5/14/07): I think the way to look at this situation is that they are
distinctly different markets. What is being integrated into the "mother-chips"
are forms of digital power control and power management. So you were absolutely
right in your early assessment that power control and power management would
move into the digital realm. MRVL was an early adopter of this approach and
today even LLTC has made some moves in that direction.
The critical thing in this situation, which is going to affect both analog
and RF, is to either leverage Moore's Law (TXN, QCOM, et al can do this well)
or stay the heck out of its way (ANAD is very consciencely doing this). The
challenge for some companies is that their business model puts them square in
the middle of the tracks and since these changes often happen faster than
business models can be changed, the less agile companies will likely take some
hits as this step function works its way through various applications.
The real thrust today is the handset market (these changes are driven by
high volume markets), but it won't stop there. Anywhere these is adequate
volume and a "mother-chip" in the design (in cell phones it is the
base band), we'll see power control, power management and, in some cases,
certain battery and RF functions move into the mother-chip. And, in my opinion,
this will happen without anyone stepping on PWER's patents.
This aside, in the large systems that use line cards, etc., there is
opportunity for PWER, but based on the rate of adoption in these markets, the
aggregate appeal may be less than it was once assumed to be.
To read additional posts by the Gilder
Telecosm Forum members, visit http://www.gildertech.com/board/
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Friday Blogger Bonus / Stock Prices are Going Up
Rich Karlgaard (5/17/07): USA Today's Money
section leads with this story: "Wave
of Buyouts Shrinks Public Pool of Stocks."
The
paper asks, "Is there reason for investors to worry?" And hints that
yes, there is.
"Investors
could lose out. Many of the companies going private were underperforming and
battered. Over the long term, such value stocks have tended to be strong
performers."
Get
it? We could all be Warren Buffetts but for KKR and Warburg Pincus.
My
take is the opposite. Buyouts are shrinking the pool of stocks, yes, and
meanwhile the global liquidity glut is feeding demand for stocks.
Hmm.
Growing demand. Shrinking supply. What does that usually predict? Bingo. Stock
prices are going up.
How
far up? Ken Fisher thinks another 30% or more.
Check our Rich’s “Digital Riles Blog:
http://blogs.forbes.com/digitalrules/2007/05/are_buyouts_goo.html
Hear Rich Karlgaard and Ken Fisher speak at Gilder/Forbes Telecosm 2007
http://www.telecosmconference.com/
____________________________________
Readings /
The Weekly
GTI
http://www.gtindex.com/
Forbes: Spring Investment Guide
http://www.forbes.com/home/personalfinance/2007/05/17/bonds-stocks-realestate-07invguide-pf-cx_pm_0517iguide_land.html
Intel Plots a Comeback
http://members.forbes.com/forbes/2007/0604/092.html
The First Terabyte
Hard Drive
http://www.extremetech.com/article2/0,1697,2131552,00.asp
A Talk With AMD Exec Henri Richard
http://www.forbes.com/technology/2007/05/17/amd-richard-intel-tech-cz_ec_0517amd.html
Yahoo Maps Upgrades -- Too Little, Too Late
http://www.wired.com/software/webservices/news/2007/05/yahoo_maps
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