Within the past two years vertical-cavity surface-emitting lasers (VCSELs) have transitioned from being the subject of exploratory research in a few scattered groups around the world to the focus of serious development efforts in numerous major corporations. In fact, the turning point seemed to occur about two years ago--perhaps due in part to the important talks and discussions at the last Semiconductor Laser Conference in Davos[l-61. At that time the 'main-stream' diode laser worker harbored many doubts about the viability of this new device. The modest performance that then existed was seen by many as indicative of what could be expected. Needless to say, we now know that VCSELs have emerged as completely viable sources, which might even fulfill the outlandish predictions made at Davos that VCSELs would be the dominate diode laser by the turn of the century. Although their performance still falls short of in-plane devices, theoretical models predict that significant improvements should be soon forthcoming. Moreover, the inherent advantages of wafer-scale manufacturability and testability as well as efficient coupling to fibers or other low numerical aperture optics suggests that many niches for VCSELs will emerge.In this report an outline of the advances that have occurred over the past two years will be presented. Then, the potential of VCSELs for applications involving integrated optoelectronics will be considered. The advances have come in virtually every aspect of VCSEL performance[7-131. Today's devices have higher output powers[7], lower linewidths[8], lower thresholds, higher efficiencies [7,9], and higher modulation bandwidths[ 10,111. Recent advances in reduced series resistance promise even more efficient and higher power devices [7,12,13]. Much of this progress has been based upon advances in the modeling of strained-layer quantum well gain and cavity losses[l4]. Figure 1 shows the results of a two-dimensional theory that not only accurately fits the behavior of a state-of-the-art experimental device but also predicts significant improvements with only modest changes in the design[l5]. Advances have been made both at the shorter and longer wavelengths [l6,17]. Other advances include predictions of lower spontaneous emission factors in VCSELs which should lead to low noise, low threshold laser diodes [18], and new results on two-dimensional arrays of VCSELs [19,20]. A significant amount of work has been initiated on integrated optoelectronic logic elements using VCSELs[21-231 as well.In brief, research advances in VCSELs continue to accrue at an increasing pace, but already development of practical manufacturable components is underway.[l] Y. Suematsu, IEEE International Laser Cog., Davos, Switzerland, paper no.