LG-Nortel is paying an initial $16 million, plus a potential extra $10 million if certain business targets are met during the next 18 months, for the WDM PON specialist that already has its leading edge access gear deployed at Korean incumbent KT Corp. . (See KT Extends Novera.)
Novera's CEO John Barton noted that his company's WDM-PON platform, which, by delivering one wavelength to each end user, enables up to 1 Gbit/s of symmetrical access for as many as 16 customers per linecard, "is a natural complement to Nortel's and LG-Nortel's carrier Ethernet solutions. Nortel's strong technology base and extensive distribution channels will ensure that service providers around the world can use our WDM-PON technology to more easily deliver high-speed FTTx services to their own customers." (See Novera's Got a New PON Spin.)
And Jae Ryung Lee, LG-Nortel's CEO, noted: "Novera's technology will be indispensable for our carrier customers because it will simplify delivery of carrier-class Ethernet FTTx services to their own customers."
The acquisition also creates a new, if indirect, relationship between Nortel and ADC Telecommunications Inc. (Nasdaq: ADCT), as the latter resells Novera's technology in Europe and the Americas. (See ADC, Novera Team.)
— Ray Le Maistre, International News Editor, Light Reading
Polder, I appreciate that you are a former employee. And I understand the VC issue. However, it was clear from the very beginning that they were undercapitalized for their business plan.
And I still contend that one of their biggest problems was the proprietary platform.... burn through all their VC cash before the market was developed. One things Calix did better than Wave7 (not to worry, Calix did PLENTY of things wrong) was to enter the market later after standards were developed.
While Calix' investors have been more patient, Calix also had REAL revenue and REAL cash flow off their remote terminal business supplying DSL, etc. They came much later to PON. Again, I know Calix is not as successful nor as well managed as many would like them to be and they sure have their flaws, but to compare Wave7 to Calix is not really apples to apples. the expired and bought out RelTec would have been a better comparison to Calix or perhaps the old AFC that became Tellabs access group. Wave7 was never in that scale nor did they ever generate any substantial revenue. I am sure Brookseven could give us more clarity on the flaws of Calix.
While Wave7 had an interesting approach, the business plan was essentially flawed from the beginning. And while the newer Wave7 platform is indeed standards based, and while I agree with you that they have nice products....they cannot compete on price nor on "onsite" support for massive PON rollouts nor on scale in any other way that would make them attractive to a large carrier and hence are and will always be relegated to being a niche player.
In the PON business, you are never going to be big enough to really scale unless you are selling to the RBOC's and other national networks like China's or Japan's. A niche player in this sector will never make a good return for the VC's. I know full well the risks around price when selling to RBOC's and large carriers. but this only reinforces my point that the PON business ONLY makes sense if you have massive scale and an incredibly low cost basis for the products. Enablence has neither. And back to my main point, it makes NO SENSE for Nortel JV to remotely consider buying Enablence.
Sailboat - your comments about wavelengths and Enablence/Wave7 demonstrate that you have not looked at the W7 product as of late. The W7 LML product did not meet the EPON spec as it was developed before the standard was established. At the time, W7 had to make an educated guess as to the final standard, and while they came close, it did have some non-standard aspects. That said, some of the differences actually improved service when implementing RF Return over the platform.
The W7 Trident platform was rolled out about four years ago. It is a standards based product. In fact, it is one of the only chassis on the market that can support both EPON and GPON is the same chassis. As a former employee I wish them well. You might question the finances but the product is one of the best on the market.
The biggest failure at Wave7 was that the venture capital group starved them to death at a critical development stage when they were rolling out the Trident platform. If their backers had been as patient (and generous) as Calix's have turned out to be, the FTTH market would have a different flavor.
While enablence is trading at 1x cash, I would seriously doubt that the Nortel JV would be looking at them. 1) they have nothing to enable the next generation of WDM-PON. No fundamental technology nor approach that is required or needed to do WDM. 2) they have morphed into a systems company (see Wave7 acquisition and others) instead of a fundamental technology company. 3) many of their acquisitions are for older platforms or technologies (the wave7 platform was developed in the early part of this decade and the fundamental approach predates PON standards..using different wavelength plan and approach than the standards that verizon uses or is used in Japan for instance).
just my humble opinion. Not a fit for what the JV is trying to do.
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