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    Upstarts Success No Optical Illusion

    By
    eWEEK EDITORS
    -
    February 26, 2001
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      The optical industry is pondering whether recent stumbles by giants Lucent Technologies and Nortel Networks signal a permanent tilt in favor of younger vendors that make optical equipment for newer-generation carriers. Or are the younger players just waiting their turn to be toppled by the tight capital markets and the slowdown in spending by carriers in the $33-billion-per-year optical equipment market?

      In the past, a carrier would choose marriage with either Lucent or Nortel, and if the other was six months quicker with a newer technology, some old boxes would see the carrier through until its chosen vendor caught up. But with todays cutthroat competition, carriers cant afford to wait six months for their favored vendor to catch up with the latest technology.

      That has opened opportunities for younger, nimbler players that can offer the carriers corporate customers more speed, bandwidth on demand, cheaper connections and services such as greater security.

      Williams Communications buys from Lucent and Nortel, but increasingly has turned to younger vendors such as Corvis and Sycamore Networks for faster, smaller optical switches and equipment for its 33,000-mile network, said Scott Pohlman, senior technologist for Internet services at Tulsa, Okla.-based Williams.

      The fact that Williams has written big contracts with Corvis and Sycamore “shows that they have real groundbreaking technologies that we are not getting from Lucent and Nortel,” Pohlman said. Williams does not consider a start-up vendor unless it can offer technology, cost or speed that is 10 times better than what it currently has, he said.

      The industry is caught in a conundrum: It hasnt yet found enough applications to fill the pipes and spur end users to demand more wavelengths, said Pittiglio Rabin Todd & McGrath analyst Roger Wery.

      Faced with eroding revenue on voice, carriers need to drive down costs as they ramp up revenue from data, so they are looking at optical equipment that can create new services, such as Sycamores SN series of optical switches.

      However, until they can spark demand with streaming video or other bandwidth-gobbling applications, carriers will slow their spending, impacting the big vendors.

      The smaller companies with focused products, such as Ciena, Juniper Networks, Sycamore and Tellium, are faring well. But small players without cutting-edge devices have the most to lose, Wery said.

      eWEEK EDITORS
      eWeek editors publish top thought leaders and leading experts in emerging technology across a wide variety of Enterprise B2B sectors. Our focus is providing actionable information for today’s technology decision makers.
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