JDS Uniphase promoting gesture recognition technology

The optical rebirth is in full effect and JDS Uniphase (JDSU) is, once again, a key player. The proliferation of streaming video and wireless communications has created a huge demand for JDSU optical gear. Shares of the Silicon Valley company have climbed to multi-year highs after releasing a quarterly earnings report that far exceeded analyst forecasts.

The two largest U.S. phone companies, AT&T and Verizon, are in the midst of building next generation fiber networks. "We think this will be the strongest demand cycle for optical since the 1998-2000 time frame," declared Miller Tabak & Co. in a research note issued earlier this month.

JDSU wants to avoid a repeat of its infamous meltdown in the aftermath of the bursting of the tech bubble in early 2000. So it has diversified. The emerging gesture recognition technology is the centerpiece of the company's diversification efforts.

JDSU has an investor day slated for February 17 to talk about the growth of its gesture recognition business. There are unconfirmed reports that JDSU supplies optical parts for Microsoft's popular Kinect gaming unit, which is based on gesture recognition.

"Gesture recognition in gaming is getting a lot of visibility, but we see this thing expanding," said JDSU chief executive Thomas Waechter. "We think there's a lot of opportunity in interfacing with TV sets, interfacing with PCs; home lighting and security, automotive and military. It's getting set up to expand into a lot of areas."

A JDSU gesture recognition demo explains how optical components are used in a video game to create a 3D image of a player.  The body movements of this avatar are captured by an infrared light sensor in the console of a TV set when playing interactive games.

Dance Central is a very popular Kinect game that uses this technology.

PrimeSense is one of the leading developers of gesture recognition technology. The Israeli company uses  JDSU lasers and optical filters. A PrimeSense video demonstrates how next generation home entertainment systems will  incorparate its gesture recognition platform.

A prototype robotic scrub nurse that is controlled with gesture recognition technology is being developed at Purdue University. The school has released a video related to their gesture recognition research.

eyeSight has developed gesture recognition for use with mobile devices, such has cell phones, tablets and personal computers.

This post originally appeared in Benzinga.

JDSU has bright future

JDSU is poised to continue its resurgence in the coming year as its optical gear is needed to meet heavy demand for overburdened metropolitan fiber networks and the cost-effective management of all optical network traffic.

The Silicon Valley company's sales are projected to rise by 25 percent in the fiscal year ending June, 2011. As a result, JDSU stock has climbed about 77 percent this year, far outpacing the performance of the Nasdaq exchange, which rose some 17 percent.

The fiber optic lines that connect city office buildings, data centers and cellular towers, known as metro fiber, are congested, reports the Wall Street Journal.

"There's a shortage of metro fiber, and the demand is just going through the roof," said Rob Shanahan, chief executive of Lightower Fiber Networks. "The past couple of years, we have seen demand accelerate like I have never seen in the 20 years I've been in the industry," he noted.

Lightower Fiber Networks, which has acquired five companies since 2008, serves the Northeast.

Telcos and telcom gear vendors, such as Cisco, China's Huawei and Alcatel-Lucent, make up 70 percent of the demand for optical equipment. Internet companies such as Facebook, Google and Ebay also buy optical gear to support their expanding data centers.

"It's usually cheaper to upgrade the capacity of existing fiber with new equipment than it is to lay new fiber," notes Lee Ratliff, an analyst with iSuppli.

Large telcos, especially in North America, are deploying reconfigurable optical add/drop multiplexers (ROADM), which help to contain costs as they reduce the amount of fiber needed for their networks. The emerging markets for ROADMs is the fastest growing segment of the optical equipment market, outpacing the larger, $2.5 billion transceiver market, according to Ovum. 

JDSU is the leading maker of ROADMs, according to Infonetics Research.

Due to the demand for cost effectiveness, JDSU is designing next generation ROADMs that will be more fully automated. "ROADMs are widely deployed in metro and long-haul networks globally," says Sterling Perrin, an analyst with  Heavy Reading. "But what's been deployed so far has limited flexibility."

Carriers want an optical meshed switching layer that does more of the costly electrical layer's functions. "I've talked to several operators, and their gung-ho on making the optical layer more flexible," says Perrin. "It will never do all the electrical layer's functions, but the [more bits it can transport] the less expensive it is to transport those bits. That's the fundamental driver," he points out.

JDSU has another new lucrative source of revenue. The company supplies two key components of Microsoft's popular Kinect gaming system.

PrimeSense, a developer of gesture recognition technology, uses JDSU optical components. The gesture recognition platform, initially designed for next generation gaming and home entertainment systems, will eventually make it possible to replace remote controls with body movements.

Click here to watch JDSU gesture recognition demos.

Related article

• Fiber-Optic Networks Regain Some Glow (WSJ.com)