Why are OEM optical transceivers more expensive than third party compatibles?

20 December 2017

Here at TXO Optics, we often get asked ‘why OEM optical transceivers are more expensive than third party compatibles?’. And ‘are third party compatibles safe for use within name-brand hardware to reap the benefit of cost savings?’. These are all interesting and valid questions, which we will address below.


Where do third party compatible transceivers come from?

In the optical transceivers market, brand-name OEMs (e.g. Cisco, HP, Juniper, etc.) aren’t really manufacturing anything. Instead OEMs have optical transceivers built for them under contract by ODMs (Original Design Manufacturers).

There is a limited number of production facilities for fibre optic technology in the world. Meaning that regardless of OEM or third party supply, most of the world’s optical transceivers are made in the same factories. Modules are built to the same internationally agreed MSA standards, with the exact same components.


Are third party compatible transceivers safe to use?

We understand that the huge price discrepancy between OEMs and third party vendors can leave customers feeling suspicious. Wondering if it is a reflection of poor quality on the part of third party compatibles. But if you’re buying your transceivers from a reputable source (like TXO Optics), there’s no reason to fear them somehow causing harm. As long as you pick a reliable vendor, third party transceivers will work just as well. You can read more about the ways in which TXO Optics delivers a quality compatible in our dedicated article.

Besides standardisation and common sourcing, our products are rigorously tested for carrier-grade quality. Testing confirms compatibility and performance on the same OEM equipment and key platforms for which it is intended. The testing regime is usually determined in consultation with the customer and can vary from every item to an agreed proportion.


Why is there is a huge discrepancy in price between OEM optical transceivers and third party compatibles?

It stands to reason that smaller, more flexible organisations have less overheads to pass onto the customer. This means that customers can get the same quality and reliability at a greatly reduced cost.

Switching to third party compatibles can save you hundreds or thousands of EUR or USD on a single module without compromising on quality or compatibility.

Next time you need to purchase optical transceivers, give TXO Optics a call.