Today's volatile market conditions have forced networking companies-from the component to the service-provider level-to re-evaluate their strategies for success. Faced with tighter margins and demands for higher performance, it is increasingly difficult for equipment manufacturers to build next-generation equipment from the ground up. Ground-up integration requires system designers to allocate tremendous time and resources to creating standard networking functionality, diverting attention from other portions of their design effort. In today's marketplace, equipment manufacturers must leverage the most efficient and cost-effective production methods available.

For optical-networking equipment, the key to short- and long-term survival and profitability is the adoption of a horizontal development model based on flexible, modular subsystems. A modular architecture enables equipment builders to take advantage of outsourced subsystems to implement common functionality while focusing the bulk of their engineering effort on higher-level differentiators. This approach is especially effective when modules implement all of the standard protocol processing required at a port, combining hardware and software functionality. This approach also utilizes innovations in packaging to gain considerable size and power advantages. As the industry continues to forge agreements for the mechanical, electrical and software interfaces to complex modules, equipment manufacturers are seeing the benefit of more affordable development of intelligent, cost-effective and reliable systems.

Moving to a modular infrastructure will bring faster time-to-market, lower product development costs and standardized, quality-controlled production processes that help to expand and fortify the broader marketplace.

Seasoned players and startups alike are focusing on a flexible, high-performance, modular architecture that includes unprecedented optoelectronic integration. This architecture is essential to keep ahead of the competition. Network equipment makers understand that traditional, vertical development is cracking under market pressure for better equipment at a lower price. They recognize that a horizontal model can provide a new channel for advanced technology, offering early access to innovations that improve performance and reduce cost.

Now is the time for equipment vendors to move to a horizontal, modular development model that provides the tools and flexibility to incorporate best-of-breed technologies in a cost-effective, timely manner-boosting profitability and providing a competitive advantage in this rapidly evolving market.