Interesting read:

OFC: Pluggable Module Makers Claim They Can't Make Money

Bottom line is that manufactures of pluggable optical modules lament razor-thin margins of their high-volume products. Pluggable optical modules – this is what POET calls VCSEL transceivers and wants to sell. However, "there are too many companies making pluggable optical modules. That sounds like a good deal for those who use them. Yves Le Maitre of Octaro said "there is no room for "me too' products. You'd better be good at what you do to make money in this business.""

Before you think this is bad news and you sell your POET shares, think twice. We know that POET has a decent manufacturing cost advantage over its competition. That means POET can offer its products at a lower price, while still maintaining nice margins and while POET's competition has little or no maneuvering room left.

Assuming POET can offer its VCSEL transceivers at a market price that is below its competitors' costs, range aspects, power consumption etc. set aside, this alone could have the following advantages:

• attractive margins for POET,
• attractive pricing for customers, leading to
• POET gaining an attractive market share quickly.