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Oclaro, Inc. Message Board

  • chief_raisinhell chief_raisinhell Mar 25, 2013 7:49 PM Flag

    Re: OFC/NFOEC 2013

    vuk,
    The CFP2 is a great module, but all the buzz at the recent OFC was about Cisco's silicon photonics version of its CPAK, which they developed as an alternative to the CFP2. Although the power budget for the CPAK is very similar to the CFP2, Cisco is not concerned about power here.

    They command over 80% of the 10G Ethernet high speed market and will use far more of these modules than their competition combined. Thus, Cisco is seeking to boost its margins with its own module by eliminating the markup (as high as 50% for LR versions) from component makers like Oclaro and Finisar.

    That leaves very addressable market (~20%) for the 11 optical component vendors that are introducing their CFP2 versions this year. So, while every OC vendor might be saying its CFP2 is well positioned to lead the next phase of high speed networking, more than likely it will be selling components rather than modules to Cisco with margins closer to 5% rather than 50%.

    The OCs desperately need a robust high end subassembly market to boost their margins and losing the contribution of high end product mix will make reaching break even next to impossible for Oclaro and several others.

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    • Cisco's implementation is a new technology and it will take time before it is adopted in large numbers as extensive production testing will be needed.

      Also, Cisco is targeting the data center and enterprise markets with the CPAK so it has little impact on the carrier optical market which is projected to have a major buildout for 4G in 2014 - 2015 worldwide.

      Cisco will do well with CPAK in the enterprise market but will still need to offer alternative module solutions for customers who do not want the CPAK.

    • I heard this argument as well. However, others are saying that the cisco product is a few years away from adoption by the carriers and MSO's. what are you hearing.

      • 1 Reply to jackwellsail
      • The four versions of the CFP2 will find application in both datacenter and metro Ethernet. Finisar is producing all 4 versions, while Oclaro has announced only one, rated at 12w which is the longest reach version. Late ast week, systems vendor Juniper also announced it has developed a 100G solution removing more high end addressable market.

        Cisco is expected to ramp its CPAK in 2014. How successful this launch will be is still uncertain, but there's no question that they are strongly committed to their CPAK products. Will their customers demand a choice between CFP2 and CPAK? Who knows how much interoperability will be designed in, but optical transceivers, with the customary 5x to 10x mark up by Cisco, have always been the secret sauce for their healthy margins.

 
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