Impression of Photonics West

Many years ago, around the time of the “dot-com” bubble, photonics had a similar bubble popping episode which in many ways was worse than the dot-com one.

The reason it was worse was that many companies at that time had real sales, profits, factories around the world and employed many thousands and thousands of people.

Going into the bubble Finisar was one of the smaller companies but we had been consistently profitable since our founding in 1988.  And our drop in sales while strong (about 30%) was much less than the biggest companies in the space which dropped 90%+ or simply went out of business completely.

One of the problems at that time was that people felt that “photonics” or the engineering discipline of the precise making, manipulating, amplifying and such with photons was the next wave to follow the “electronics” wave that had been so successful for venture investors and startup founders for the past 20-30 years.  Beyond similar sounding names there was promise in the late 1990s.  Fibers began to carry information at 2.5 and 10 Gb/s over distances of 1000s of kilometers using optical amplifiers, dispersion could be managed and corrected precisely, large numbers of wavelengths could be place onto a single fiber pushing the information carrying capabilities even further … and all these wavelengths could be amplified and dispersion corrected in parallel and as optical signals without conversion back to electron-based information.  Magic seemed everywhere in the field.  And to many people at the time, especially Venture investors, the world looked like this.

What we thought

 

Unfortunately this was not true.

What was true emerged over the next 5-8 years after the bubble burst.  And then we found out the world needs did not call for photonics to be so important.  So then the real world looked like this.

What was true

 

In reality, the most important trend coming to communications was to be wireless radio based communications that we see today as 3G/4G wireless phones, WiFi for LANs and Bluetooth for personal devices, etc.  It is technology that touches us in so many ways all the time.  And then we underestimated the resillance of copper based communications – on circuit boards, for inter and intra cabinet communications, for cable television and internet services, and even the upgrading of our phone lines to DSL.  So instead of being the whole square with electron based comms being marginalized and becoming insignificant, phontonics really only continued to dominate in long haul telecom and then it moved into data centers and buildings for datacom.  [Datacom is where Finisar got its start, today it dominates both spaces of photonic communications.]

Unfortunately so much money was invested that the field continued to be over funded for the next decade and consolidation took longer than everyone thought and many companies have very long periods of losses and shareholder disappointment.

Now lets move into the present day.  This week San Francisco hosted the Photonics West conference and exhibition.  It allowed 1000s of companies to show their products, to hear talks on various aspects of photonics technology and so forth.

And what I saw was that so much of the investment money has poured into optical fiber communications but that is beginning to change.  We are seeing the maturation of that field of applications for photonics but the fields of sensing are just beginning to find their strides.  And photonic engineering and sensing of the world around us – for self driving cars, more accurate medical diagnostics, better ways to make, manage, store and transfer energy are all being explored.  And these can bring a renassiance to the field and an even brighter future.

But we must not over invest in fields which have been good in the past.  As those mature they are less interesting for venture like investments and more the domains of larger companies that can invest the large sums needed to make smaller incremental improvements.

 

Posted in Essays, Investing, Optical Technology, Personal Stories

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