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Corning History

Corning History . Founded in 1851 Corning Glass Works until 1989 Now - Corning Incorporated . Corning Structure. Three Groups Telecommunications: optical fiber/photonics Advanced Materials: environmental products / science products / optical & lighting

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Corning History

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  1. Corning History • Founded in 1851 • Corning Glass Works until 1989 • Now - Corning Incorporated

  2. Corning Structure • Three Groups • Telecommunications: optical fiber/photonics • Advanced Materials: environmental products / science products / optical & lighting • Information Display: LCDs for flat panel display / projection video lens assemblies

  3. Overview of Telecom Industry • Booming internet traffic & bandwidth-hungry applications • legacy systems can’t handle new flexibility requirements • Deregulation of Telecom industry • veteran players upgrading systems • upstarts creating new networks • Result - Need More Bandwidth!!!

  4. Overview of Telecom Industry - Innovation • Race to develop all-optical networks • laser designers addressing attenuation problems • wavelength differentiation (DWDM) • signal-guiding technologies • improved materials (fiber) • ALL AREAS GROWING >50% A YEAR!

  5. Overview of Telecom Industry - Consolidation • Race by service providers to get low-cost bandwidth online • Massive R&D expenditures • time & personnel • “nimble” issues • Desire to decrease supplier base • Manufacturing issues • What is next hot technology?

  6. Overview of Telecom Industry - Conclusion • Changes in : • regulation • service provider competition • bandwidth demand • emerging markets • “Fast Clockspeed” Industry!

  7. Corning - Strategy • Old days: Content to provide “building blocks” • Lucent & Nortel • New strategy: “one-stop shop” for digital age for opto-electronics components • JDS Uniphase same strategy - ZOINKS!

  8. Corning Competition - JDS Uniphase • July 1999 - merger of JDS Fitel & Uniphase • Bought: • AFC Technologies (optical amplifiers) • EPITAXX (telecom networks) • Ramar • SIFAM • E-TEK / Optical Coating / Cronos

  9. Corning - Strategy • Incredible R&D - source of pride • can’t develop everything • “One-stop shop” is goal • Buying Spree to Augment Products • Oak Industries Nov 1999 (pump lasers, laser chips, and packaging expertise) • NetOptix Feb 2000 (DWDM)

  10. NetOptix - Case Study • Andlinger bought Galileo in Jan 1999 for $11.5M • sold off failing businesses • focused efforts on DWDM scale-up • invested $25M in US and German manufacturing facilities • DWDM hot technology in past 6 months • demand >> supply • Lucent can’t meet quarterly targets due to suppliers

  11. NetOptix - Case Study • Corning requested filters • quality much better than they could produce • Dinner with NetOptix 25 JAN • 4 FEB preliminary proposal letter • 8 FEB negotiations • 13 FEB agreement • 14 FEB announcement - $2.15B buyout

  12. NetOptix - Case Study • Same day, Corning announced: • JV with Samsung Electronics to package filters • Acquisition of British Telecom’s Photonics Technology Research Center to develop next-generation DWDM

  13. Analysis of Corning Strategy • Analysis in to parts: • Decision to provide end-to-end service • Decision to vertically integrate

  14. Analysis of Corning Strategy - End-to-End Service • Given scope of technical challenges, systems provider better bet • Elimination of bottlenecks requires systems solutions • Corning’s R&D significant strength • Systems- approach better given changing technologies • bets hedged (not into one technology)

  15. Analysis of Corning Strategy - Vertical Integration • Impact of clockspeed on need to vertically integrate • systems dynamics model • supply chain control

  16. “Scale” (bottlenecks) in the Telecommunications Pipeline TYPICAL USER--TELEPHONE NETWORK Intemed. Switching Office Intemed. Switching Office Last Mile Local Exchange Cust. (web users) IntereXchange Carrier Last Mile Internet Hosts ---Amplifiers--- Information Flow Conclusion: Control lies in the area with the most “scale”.

  17. Analysis of Corning Strategy - Conclusion • Complete systems provider advisable • Vertical integration strategy must be applied prudently • NetOptix - dependent for Knowledge & Capacity BUY! (Intel Inside) • Oak - diversified company (pump lasers, but also gas grill controls) • Acquisition and Integration costly - money / personnel / time

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