In June 22 IBD in the Internet & Technology section, an article on Nortel compared Q1'99 to Q2'00 fiber optic gear market share.Co. '99 '00NT 28% 37%LU 28% 19%Fujitsu 13% 12%Alcatel 10% 11%Marconi 6% 10%My question is: Does this show that NT is king of fiber optic gear, at least for now?Thanksbstricko
First of all - I own NT, so take my comments in that perspective. I think they are doing all the right things and have the correct focus. I have a concern that, being an "old economy" company that has seen the light, they carry some burden from that era. They have been unloading their manufacturing (and many of their workers) and concentrating on the new economy - very successfully. As I say, I own several hundred shares - it's been a ten-bagger for me. So I am very optimistic. Also realistic.Don
In June 22 IBD in the Internet & Technology section, an article on Nortel compared Q1'99 to Q2'00 fiber optic gear market share.Co. '99 '00NT 28% 37%LU 28% 19%Fujitsu 13% 12%Alcatel 10% 11%Marconi 6% 10%My question is: Does this show that NT is king of fiber optic gear, at least for now?Thanksbstricko From our fantastic new Xerohyped FAQ.King = Not a gorilla. (And it isn't going to become one, either). As LindyBill pointed out a king is "the Market leader, properly with a two-times lead or better over its closest competitor. If the lead shrinks too far, the king becomes a prince, and we have a kingless market. Because they lack architectural control, and because switching costs are low, they cannot force competitors onto the defensive the way Microsoft, Intel, or Cisco can. Seagate is a king of hard drives."What all this means in practical terms is a King benefits from a higher economy of scale compared to its rivals.So, from those figures no, just. A king needs to have at least twice the market share of it's nearest rival. So if Nortel had a 38% share it would. From your figures there are no Kings of the "fiber optic gear market" only Princes.
I think Nortel will prove itself a king in the optical transport space next quarter as Lucent is slipping badly. They have been unable to execute their strategy of using in-house product development, and continue to lose key people. Their market share is likely to continue to drop. See http://www.lightreading.com/document.asp?doc_id=929 for a discussion of the market share figures you quoted.There are likely to be a number of games within the optical networking space. Long-haul transport seems to be a royalty game now, but could become a gorilla game if someone has proprietary control over a technology that dramatically improves transport efficiency (e.g. Corvis). In my limited knowledge, a gorilla game could develop in the optical switching space where there a number of different technologies (mirrors, bubbles, acoustic wave, etc) striving for first mover advantage. The following article suggests that Sycamore may be facing a strong challenge from Corvis, which is going public soon.http://www.lightreading.com/document.asp?doc_id=934The impression I get from the lightreading articles is that it's still very early. Build-out of optical networking is going to take quite a bit of time. In my community (Milwaukee), TimeWarner has just begun to offer broadband, so I'm guessing it'll be 5 years before I have access to an optical network.
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