Fiber Optics Market To Reach $4 Bn

by CXOtoday Staff    Aug 22, 2006

A recent Frost & Sullivan survey has revealed that the fiber optics market is poised to grow exponentially. The market for products like laser diodes, erbium doped fiber amplifiers (EDFAs) and reconfigurable optical add/ drop multiplexers (ROADMs) are predicted to grow.

According to the study, these products will garner greater profit margins in the first few years of adoption and the technological advancements would lead to further alterations in older products such as optical amplifiers and connectors, which are likely to spur the market further.

Further analysis of the study - “World Optical Products in Fiber Optics Market” - said that the market will touch $3.41 billion in 2005 and will reach $4.38 billion by 2009. It further detailed that demands for optical components and modules, in underdeveloped countries, would be suited more to wireless rather than fiber optic network.

Salient features of the survey were that components like optical switches, connectors, and emitters will not have a high degree of automation. F & S has claimed that there will be an increase in recurring costs in production lowering profit margins for vendors.

“The rate of technology development in wireless is likely to be more than that of fiber optics and this could be seen as the main restraining factor, which could mitigate the growth of optical products in future,” explained Deepa Doraiswamy, Frost & Sullivan Industry Manager

“In addition, vendors in Asia Pacific are able to manufacture components at lower costs, which forces companies from the West to compromise on profits, thus damaging their morale,” noted Doraiswamy.

The survey said that the need for manufacturers would be to increase investments to improve automation in products such as optical switches, connectors, and emitters, and consequently attract end users from the manufacturing industry.

The research firm has claimed that threat of low-cost products and reduced profit margins will force fiber optics manufacturers to strategize on outsourcing manufacturing activities to regions that include Asia or Eastern Europe. These moves will further boost revenues and increase the growth potential of the market.