MOUNTAIN VIEW, CA - March 14, 2002. According to a recently published report by market research firm Strategies Unlimited, the market for high-speed optical data link modules (1 Gb/s and above) used in the campus and premises environment decreased by 10% in 2001, to $395 million. The downturn was a direct result of the slowing world economy and the accompanying reduction in corporate investment in computing and networking equipment (collectively termed information te chnology, or "IT"). According to the U.S. Department of Commerce's Bureau of Economic Analysis, fixed private investment in information processing equipment and software decreased from $467 billion in 2000 to $428 billion in 2001, a reduction of 8%, compared to an average growth rate of more than 12% per year for the preceding five years. This decrease resulted in a dramatic slowing of the rate of growth in Gigabit Ethernet and Fibre Channel equipment, both of which drive the high-spe ed optical data link module market. Due to inventory effects and declining prices, the market for serial optical data link modules (transceivers) used in these applications declined by 19% in 2001.

A bright spot in the market was a sharp increase in the shipments of parallel optical interconnects. These transmit/receive modules are being used in very-short-reach (VSR) interconnects between high-performance telecommunications equipment chassis (e.g. Internet core routers such as Cisco�s 12400 series) and in optical backplanes for the highest performance equipment (e.g. terabit-class switches such as Sycamore�s SN 16000). This market was primarily a developmental one in 2001, but the upt ake in shipments of parallel transmit/receive modules was dramatic as OEMs focused on the development of next-generation equipment for release in 2002.

As the economy recovers in 2002, and corporate IT investment resumes its historical growth pattern, the market for network equipment and components will respond accordingly. Although only modest recovery is forecast for 2002, over the next five years growth will be dramatic. Not only will Ethernet and Fibre Channel equipment move to higher data rates in this time frame (10 Gb/s), but new I/O and networking technologies, including InfiniBand and iSCSI, will enter the market, broadening the ad dressable market for high-speed optical data link modules. Overall, the market for transceivers used in these four enterprise applications is forecast to grow from $345 million in 2001 to $4.9 billion in 2006. A large part of this growth is due to the projected emergence and rapid market development of higher priced 10 Gb/s modules (generally termed transponders) in 2003 and beyond.

Parallel optical data links are also projected to have dramatic growth in the next five years, although their near-term market will be somewhat limited by the continuing downturn in telecom capital expenditures. The increasing penetration of parallel optical interconnects into the VSR equipment interconnect market, combined with the growing market for optical backplanes in terabit-class switches and routers, will result in an overall market for parallel optical interconnects forecast at $1.6 billion in 2006.

Details of the markets and forecasts discussed above are contained in Strategies Unlimited�s report OM-20, entitled High-Speed Optical Data Link Module Market Review and Forecast (1 Gb/s and Above). The report is available for immediate delivery at a price of $4,950. For additional information contact Tim Carli at (650) 941-3438 or e-mail tcarli@strategies-u.com.

Founded in 1979, Strategies Unlimited specializes in market research and strategic consulting directed at photovoltaic components and systems, optical networking, optoelectronic, and RF/wireless semiconductor industries. The company is based in Mountain View, California and is a research unit of PennWell Corporation, a global media and information company serving the energy and advanced technology markets since 1910.