Teknovus vs PMC-Sierra

Lightreading has an interesting article about the competition between Teknovus and PMC-Sierra to capture segments of the Asian broadband access market. It mentions Teknovus' CEO Rex Naden mentioning that Teknovus still is hopeful of getting a big contract in Korea as KT moves towards increased deployments and possibly migrate to higher bit-rates (Teknovus supports non standardized EPON solution at 2.5 Gbps).

Competition seems intense between these two leading EPON vendors, because volume deployments of EPON have still not caught up except for in 2 countries, Korea and Japan, which have a combined population of 175 million. On the other hand , EPON is now a very mature industry, and price per port is spiraling down. Since the customers are vendors who sell to a consumer market which is not willing to afford more than $100 per box (and mostly this cost is absorbed by service provider), the margin per port is very low. It is a difficult business unless deployment picks up to tens of million ports per year.

In this light, I believe that its best for PMC-Sierra and Teknovus to join hands and target GPON competition. May be its too late, since North America is heavily inclined towards GPON at this point of time. But there are the big consumer markets - India and China. And Europe is an emerging market too, though many cities such as Paris and Amsterdam have preferred active ethernet.

But often, when two leading competitors collaborate, they increase the market size, which is mutually beneficial. Take the case of Google and AskJeeves in early 2000-2001. Collaboration helped them expand search, and see the size of the search market now.

So my suggestion to both companies is: collaborate against competing technologies. Broadband access market is huge. With positive developments both companies may have billion dollar revenues by the turn of the decade.