Third-Party vs Vendor-Branded Optics: Why Pay More?

For many network operators, there has never been a more pressing need to expand their data centre bandwidth. With organisations in all sectors handling ever-increasing quantities of data, and the shift to remote working popularising digital communication, investment in mass fibre deployments (FTTx) is accelerating at an unprecedented pace.


Fibrestorm Direct Attach Cable

Author: Mike Peacey

However, the speed of this necessary evolution is often held back by budgetary concerns. Purchasing the optical hardware to support these upgrades can be an expensive business, but even more so when you are limited to procuring brand-name transceivers and cables exclusively from the system vendor - usually for a substantial markup.

Here, we explore the ways in which third-party optics can help you and your business to overcome many of the cost hurdles associated with vendor-manufactured products - as well as the various other benefits provided by compatible optics from a trusted vendor.

The price problem of vendor-manufactured optics

According to a Gartner report from 2017, network transceivers make up between 10% and 15% of enterprises' network capital spending. If this figure seems surprisingly high, it is possibly because OEMs tend to mark up the cost of transceivers to a much greater extent than most other hardware products.

Gartner's analysis indicated that enterprises overpay for transceivers by 50% or more on a regular basis, with markups of 350% or more found in some of the examples the company reviewed. The report also suggested that OEMs are often reluctant to offer deep discounts on transceivers and optical cables, without aggressive negotiation.

These costs can be even greater for operators that require multiple optical transceiver SKUs across many different system vendor platforms, which lead to complex RFQs and/or public tenders - and often substantial costs.

As such, Gartner concluded that these market trends represent "the biggest rip-off in networking", calling on businesses that are conscious about cost optimisation to find trusted suppliers of third-party components as an alternative.

This will not be possible for every business, as some are locked into procuring optics directly from their system vendor due to contractual obligations; nevertheless, the analysis highlights the potential value that compatible optical transceivers can provide for operators who are willing and able to shop around.

The cost benefits of compatible optics

These concerns over costs have meant that many Tier 1 and 2 network operators across Europe have approached Fibrestorm to discuss the procurement and delivery of compatible optics, primarily for the goal of achieving greater cost-effectiveness.

In doing so, our customers have been able to unlock a wide range of commercial benefits, including:

  • Significant cost savings compared to the optics pricing offered by system vendors, often reaching millions of pounds, euros or dollars
  • Flexible payment terms, allowing customers to tailor their payment schedules according to their needs
  • Upfront, fully-costed, multi-year pricing structures, often including price reductions over a specified time frame
  • Volume discounts and special offers for customers who buy in bulk

These proven benefits have helped Fibrestorm win contracts across Europe and around the world, and make it easy for us to demonstrate the value for money that compatible optics provide in a competitive market place.

The practical benefits of working with a trusted third-party vendor

In addition to these cost benefits, purchasing third-party optics from a trusted supplier can also deliver substantial practical advantages, with vendors such as Fibrestorm able to provide a bespoke service that meets your specific needs and requirements.

Here are some of the technical and practical benefits of choosing a respected third-party vendor:

  • An expanded, vendor-agnostic product range, allowing more choice and flexibility for your network. Fibrestorm can supply many additional parts that are not available from OEM vendors themselves, such as extended-distance bi-directional transceivers or active optical cables
  • The option of custom builds to suit your technical specifications. For example, Fibrestorm took on a public tender that required a non-standard 1-gigabit transceiver with an enhanced sensitivity level to be designed and built, with the resulting part ultimately exceeding the required specification
  • The capability to create mirrored networks, replicating the network configuration of an operator's networks in the vendor's labs for on-site and remote testing
  • An option for OEM design work, which can develop over time. For instance, one FTTH tender that Fibrestorm undertook has now expanded into a partnership with the customer's equipment manufacturer to design and supply a bespoke transceiver, to be built into their gateway router

When taking these commercial and technical considerations into account, it is clear to see that buying third-party can be a win-win proposition for operators who are willing to take the time to find a trusted supplier of high-quality compatible optics.

We pride ourselves on a product offering that combines cost-effectiveness with our flexibility and experience in dealing with global companies, ensuring we are able to satisfy even the most stringent quality demands.

To find out more about compatible optics and our market-leading services, give us a call today.