Read about a Chart Worth 500 Words, What's Up with LIDAR, Fiber Optic Sensorsj, Advocacy, Special Events, New Reports and Other Noteworthy News, Opinions & Opportunities
In this Issue:
A Chart Worth at Least 500 Words
It's said that a picture says a thousand words. This OIDA newsletter commentary typically runs about 500 words. Let's see how many the figure below can say.
Source: OIDA (2019) and Cisco VNI (2017 and 2019).
It starts with traffic. Shown in the figure are estimates and forecast from Cisco's Virtual Networking Index of total IP (Internet Protocol) traffic, estimated at 200 exabytes/month for 2019. The compound annual growth rate is 29% for the period shown here, but what’s remarkable is how this growth has been going on for so long. And Cisco expects 25% growth continuing through 2022 generated from 5G networks, streaming and gaming.
Next, consider the trajectory of cloud operator revenues for Alphabet (Google), Amazon's Web Services (AWS) segment, Facebook and Microsoft's cloud services segment. The compound annual growth of these operations is 25%, approximately tracking Cisco's traffic growth. This is remarkable growth for four operations that are already very large. Projecting Q4 revenues, OIDA expects these operations alone will exceed US$ 300 billion. That's not a typo, it's billions. And it doesn't include the cloud revenues of the many other operators worldwide.
The figure also shows capital expenditures for the companies listed above, which approximately tracks the traffic and cloud revenue growth. Because companies don't break out capital spending by segment, the numbers include capex for all of Microsoft and Amazon. Those companies are hardly pure play in cloud services, with Microsoft selling hardware and Amazon in retail sales, include a chain of grocery stores (Whole Foods). But they don't distort the trajectory; in fact, the growth rate is even greater without those two companies. The capex of just these four companies will be about US$ 70 billion in 2019. (Alphabet and Facebook alone will likely spend nearly US 40 billion.) This amounts to about 18% of revenues, which isn't unusual for capital intensive companies, but is a massive investment in hardware.
Then compare all this to the revenues of three U.S. carriers: AT&T, Verizon, and Comcast. Their revenues are flat, even as Internet traffic is growing at 29% compounded annually. Moreover, the revenues include AT&T's bump in revenues from its acquisition of Warner Media in 2018, Comcast's ownership of NBC Universal and recent acquisition of Sky and the wireless operations of all of them. In fact, the revenues for wireline services for AT&T and Verizon have steadily declined over the period.
The carrier revenues of just these three companies amount to a staggering US$ 380 billion in 2019. They clearly aren't gaining revenue from the growth in traffic. Instead, for growth they are looking to wireless services (think 5G) and content (Warner, NBCUniversal, and Sky). Perhaps when the cloud companies get to the size of these three carriers, growth will be harder to find for them too, but so far it hasn't happened.
So far we've said nothing about profits. The profit story is more complicated because of the nature of financial reporting, but the four cloud operators are reporting over US$ 100 billion in net profits for the last four quarters, compared to about US$ 550 billion in revenues for the combined companies. That amounts to about 18% net profit margin. That's after taxes and interest. It's what goes to the stockholders, unless it's used to stockpile cash or buy back stock. Compare that to a 12% net profit margin for the three traditional carriers, including wireless services and content.
We're over our 500 word limit, and there’s still more to say: about the "second derivative", and about optics companies. So it may be true: a picture really does say a thousand words. Look for the rest for another OIDA newsletter.
What's Up with LIDAR?
It's a question we often get: what's going on with LIDAR? With all the talk about using LIDAR in self-driving cars, is it the Next Big Thing? Or a bust? The answer is neither.
First, it is important to understand that optical technology has to be tested out by system integrators long before it's ramped into production. Self-driving vehicle systems are new and extremely complex, and suppliers are still innovating LIDAR technology. This means we are in that inevitable slow period when integrators make critical decisions on technology, eventually leaving most of the 80+ LIDAR suppliers seeking a future outside of the automobile industry. Or sold for their intellectual property in software.
Second, there is a sense that the path to self-driving vehicles is not to leap directly to a robotic vehicle, notwithstanding Google Waymo's success on the streets with its cars. Caterpillar mining equipment has been in commercial use since 2013. And robotic vehicles may continue to appear as shuttle buses on fixed routes. But the path to automation appears more likely through incremental steps, known as ADAS (advanced driver assistance systems). ADAS started with cruise control and anti-lock braking but the list of features gets longer every year.
It may turn out that Tesla's CEO, Elon Musk, got this one right. He famously dismissed LIDAR in favor of conventional imaging. Musk also claimed Tesla would be operating a fleet of robo-taxis by the end of this year, so he's not to be taken too seriously. Nonetheless, Musk operates on a short time scale, and by the time LIDAR does gain traction in that market, Tesla may be in a very different place.
Third, when the industry does get to driverless cars, one of the first applications will be robotaxis that use the capital cost of the vehicle more efficiently. LIDAR would be expensive in early volumes, but the cost of self-driving systems could be spread over a high utilization rate. Over time the cost of LIDAR would decline, making a driverless car more widely affordable, perhaps even to leave one parked in a garage most of the day.
The Gartner hype cycle. Source: Wikipedia.
The delay discussed here is not the so-called Trough of Disillusionment from the Gartner hype curve. The curve was addressed in a recent OIDA article in OSA's Optics & Photonics News, and is illustrated in the figure. The hype curve describes human perception, not technology itself. If an expectation was that LIDAR should be taking off by now, then perhaps the expectation was unrealistic to begin with.
OIDA will be addressing optical sensors for vehicles and other mobile platforms at an upcoming forum on 24 June 2020 in San Jose, collocated with Sensors Expo.
The Support for Fiber Optic Sensors
Fiber optic sensors are used in oil and gas exploration, perimeter security and so-called smart construction of buildings, bridges and pipelines. The variation of the properties of the fiber are measured by an interrogator. It is a technology that has seen growth over the years, but the biggest opportunities always seem to be just around the next bend. OIDA has followed this topic for many years and there is some renewed attention in it recently.
Source: IGI (2019), with permission.
The Photonic Sensor Consortium estimates that the distributed fiber sensing system market is over US$ 600 million today, and expected to pass US$ 1 billion in 2023. The single point fiber sensor segment would bring the total fiber sensor market to US$ 1.3 billion in 2023. (The forecast is sold through IGI, Information Gatekeepers. See here.) About half of the distributed fiber sensor sales are for the oil and gas exploration market, which moves with oil prices. Apart from that, the market has seen steady but modest growth, as the target end-users carefully take up new technologies.
The Fiber Optic Sensor Association (FOSA) was founded in 2017 to educate government, industry and the public about fiber sensing. FOSA spun out of the Fiber Broadband Association and its board includes leaders in fiber and cable such as Corning, OFS and Prysmian. Around the time of FOSA's founding there was speculation that the new Trump administration would lead a major initiative to fund U.S. civil infrastructure. That initiative never happened but FOSA is regularly producing educational webinars and continuing its advocacy in Washington DC.
The IEEE is hosting an effort to standardize some terminology in fiber sensors. That effort is being led by David Krohn, a prominent name in the topic and behind the Photonic Sensing Consortium forecast. For more information, contact Tom Hausken at firstname.lastname@example.org.
RSVP for OIDA Member Benefit Orientation on 4 December
RSVP for OIDA's member benefit overview orientation on 4 December at 13:00. This is an opportunity to learn more about key membership benefits you and your company should be taking advantage of and explore how to maximize performance and grow your business.
Whether you have been an active member for years and need a quick refresh or are transitioning to the new OIDA membership model — this orientation is a must-attend! Please feel free to share this with your colleagues. When you join OIDA, everyone at your organization becomes a member.
New! OIDA Workshop on Embedded Photonic Manufacturing for Data Centers—Registration is Open
8 March, Co-located with OFC, San Diego, CA, USA
Join your colleagues on 8 March as leading experts take the stage to discuss new business and technology trends for manufacturing embedded photonic devices for data centers.
Four immersive panel discussions—all led by subject matter experts—will help you gain a better understanding of the issues that could impact your company. Hear from leading decision makers with responsibility for the development of next generation data centers, who will share their key technology and cost requirements. The workshop will also have speakers from leading photonic companies and service providers who are developing innovative products and advanced manufacturing services to meet these emerging requirements.
View the program and register by 26 January to save and take advantage of your OIDA Member discount.
First Look at OIDA Executive Forum 2020—Registration is Open!
9 March, Co-located with OFC, San Diego, CA, USA
Join leaders from top companies on 9 March at OIDA Executive Forum as they discuss critical technology advancements and business opportunities that will shape the network and your company. In just one day you can connect with all the key industry experts in one place. Learn about future trends key to your business, your competitors and your industry.
There will be four panel presentations this year and a Keynote Presentation by Elizabeth Rivera Hartling, from Facebook. A special Fireside Chat will feature a panel of executives from across the optical network supply chain providing their unique perspectives on a broad range of industry issues. Keep current on the service provider landscape, network automation, how 5G and other trends will drive fiber optic expansion and edge computing, the next big things like AI, cloud gaming and AR/VR—and more! Confirmed panel speakers include representatives from Broadcom, Cisco, Huawei and II-VI Incorporated. Stay tuned as we add to our speaker line-up!
View the program and register by 26 January to save and take advantage of your OIDA Member discount and free colleague registration.
OFC Career Zone — Now Open
The OFC Career Zone is where job seekers and employers from all areas of optical communications connect. Check out the OFC Career Zone Online and create your account today!
Be sure to also participate in our Onsite OFC Career Zone Live at OFC, San Diego Convention Center, 10-12 March 2020.
Questions: contact email@example.com or +1.202.416.1942
Present Your Applied Industrial Optics Research at AIO
20-22 July 2020, OSA Headquarters, Washington, District of Columbia United States
The OSA Applied Industrial Optics Topical Meeting (AIO) is where researchers and professionals from diverse backgrounds gather and discuss photonics research, technology development and commercialization. Here, industry leaders can stay informed of the latest advances in photonics technology. AIO creates an engaging multi-disciplinary program that encourages the sharing of ideas and generates cross-pollination across fields. Through technical sessions, tutorials, panel discussions and networking events, AIO grants unprecedented access to industry experts and insight into today's commercial climate. It offers a unique atmosphere that is both informative and interactive, providing a forum for photonics leaders to meet, collaborate, and innovate. Submit your research for consideration by 18 March 2020 (12:00 EST / 17:00 GMT). Learn more. Exhibit and sponsorship opportunities are also available for this meeting.
Tis' the Season to Save on Your OSA Laser Congress Exhibition Booth
Exhibition: 13 – 15 October 2020, Conference: 13 — 17 October 2020, Québec City Convention Centre, Québec Canada
Laser technology is advancing at an ever-increasing pace, and the applications continue to grow and fuel new discoveries. 480+ industry leaders from around the globe will be coming to the OSA Laser Congress Exhibition looking for the product solutions your company provides.
The 2020 OSA Laser Congress provides a comprehensive view of the latest technological advances in solid state lasers as well as the applications of laser technologies for industrial products and markets. Market-focused sessions and presentations describe needed technological and engineering advances required to move these laser technologies into commercial products.
Exhibition for Two Premier Meetings:
- Advanced Solid State Lasers Conference (ASSL) is THE international event covering all aspects of solid state laser system design and implementation.
- Laser Applications Conference (LAC) focuses on materials processing and applications for high intensity lasers.
OIDA members can save US$ 450 on exhibit space! Learn more.
Congratulations Newly Elected OSA Fellows
We extend our congratulations to the following 2020 OSA Fellows representing the industry sector. Fellows are elected based on their significant contributions to the advancement of optics and photonics through education, research, engineering, business leadership and service. Learn more.
- David C. Brown, Advanced Photonic Sciences, USA
- Yi Cai, ZTE TX, Inc., USA
- Achyut K. Dutta, Banpil Photonics, Inc., USA
- Alexandre Y. Fong, TruTag Technologies Inc, USA
- Ulrike Fuchs, Asphericon GmbH, Germany
- Di Liang, Hewlett Packard Labs, Hewlett Packard Enterprise, USA
- Claudio Mazzali, Corning Optical Communications, USA
- Thomas Pfeiffer, Nokia Bell Labs, Germany
- Katharine Schmidtke, Facebook Inc., USA
- Jesse E. Simsarian, Nokia Bell Labs, USA
- Larry B. Stotts, Stotts Consulting, USA
- Rachel Won, Nature Photonics. UK
Member Benefit: Plan Your 2020 Strategy with Industry Reports Available to OIDA Members
Industry leaders worldwide are planning their strategy for 2020 and beyond. A winning strategy is driven by intelligence. OIDA Members have exclusive—and complimentary—access to OIDA Market Update reports. Have you downloaded our newest industry reports?
Reports cover areas such as:
- Optical communications
- Optical sensors and applications
- Military and security
- 3D imaging
- 5G mobile deployment
- Industrial machine tools
- LED Lighting
- Augmented and Virtual Reality
- International research funding
- Integrated photonics
- And More!
OIDA members have free access to all reports. We encourage you to browse the OIDA Publications and Reports Center to see everything available to you.
It's a Wrap! 4th Annual OIDA Funding Accelerator Speed Meetings Focused on SBIR/STTR Funding
OIDA is committed to fostering the development and commercialization of new optics and photonics technologies that will expand the industry's product pipeline, and to offering OIDA members the opportunity to get the funding they need. We brought companies with less than 500 employees together with top U.S. federal agencies for one-on-one meetings and presentations at OSA headquarters on 12 November. Companies had the opportunity to discuss their innovations and business model with this exclusive audience, and got an insider perspective on what specific agencies are looking to fund. The event helped government agencies better understand what our Industry can offer and how optics and photonics technologies can help them meet their goals.
Thank you to the participating agencies: NASA, Navy/NRL, National Eye Institute/National Institutes of Health (NIH), National Science Foundation (NSF) and the Missile Defense Agency (MDA).
New Submission Deadline: OSA Optical Engineering Team Award
Submissions are now being accepted for the 2020 Paul F. Forman Team Engineering Excellence Award, which recognizes team technical achievements such as product engineering, process and software development, and patent development, as well as contributions to society such as engineering education, publication and management, and furthering public appreciation of optical engineering. The new deadline is 10 April 2020. Don’t miss this opportunity to gain recognition and promotion for your optical engineering team(s).
Promotion of winning teams includes:
- Special recognition in OSA's magazine, Optics and Photonics News
- A dedicated press release
- Outreach on OSA social media channels
- Recognition during Frontier's in Optics (FiO), OSA's annual meeting
- Participation in the FiO Awards Ceremony and Reception
- Recognition in trade magazines, journals and/or conference publications
Invitation to Join the OIDA Optics and Photonics Industry LinkedIn Group
Join 3,000+ of your colleagues in our OIDA Optics & Photonics Industry Network LinkedIn Group. This one-of-a-kind Forum for Industry lets you participate in discussions about cutting-edge issues. Extend your professional network. Exchange information about problems, ideas and solutions. Collaborate with experts in your field. Now is the perfect time to build a relationship with fellow optics and photonics professionals!
OIDA (OSA Industry Development Associates) Council
Thank you to the volunteers who oversee the programs and services available to the Industry Community.
- Claudio Mazzali,
Corning Research &
Development Corp, Chair
- Simin Cai,
Go!Foton, Chair Elect
- John Dexheimer,
LightWave Advisors, Inc.
- Turan Erdogan,
- Amy Eskilson,
- Christoph S. Harder,
- Frederick J. Leonberger,
EOvation Advisors LLC
- Anjul Loiacono,
- Debbie Wilson,
Lumentum Operations Inc.