The long-anticipated consolidation in the transceiver space has claimed a victim in Swedish startup Optillion AB.

Company officials confirmed that Optillion filed for bankruptcy Friday, Feb. 11. The company has been placed in the hands of a liquidator, Roland Sundqvist, who has just begun the process of deciding the company’s fate.

Optillion's operations have stopped, and its 70 employees will be laid off.

The liquidation means Optillion will cease to exist as a company. Should the firm somehow manage to remain intact and restart operations, it would have to do so under a different name.

Other options include selling the firm as a whole, or selling off intellectual property in pieces, Sundqvist says. He notes that "a couple of companies" already have inquired about the availability of Optillion’s assets, although he wouldn’t give out any names.

Optillion developed 10-Gbit/s modules for 80km distances, selling transceivers conforming to the Xenpak multisource agreement (MSA) for pluggable optics. The company had also joined the MSA group for the smaller X2 specification (see Sweden Invades OFC and X2 MSA Ratifies 10-Gig Spec).

Xenpak and X2 specify a smaller alternative to the older 300-pin transponder standard used for 10-Gbit/s Ethernet and OC192 connections. However, the smaller size of pluggable optics presents a design challenge. That, combined with a continued weak market for long-haul components, has made the 80km Xenpak a relatively rare bird.

Big Bear Networks and Opnext Inc. have tackled the challenge, announcing 80km Xenpak parts. Finisar Corp. (Nasdaq: FNSR) is taking a swing at 80km, too, but has skipped ahead to the smaller XFP module, a next-generation successor to Xenpak and X2 (see Big Bear Hunts 10GigE Market, Opnext Intros 10-GigE Module, and Finisar Gets XFP Happy).

Had it survived, Optillion might have found its way there, too. "Our focus was on the longer reach, so the natural step would have been to go to the XFP [module]," says Patrik Evaldsson, Optillion's chief technology officer.

To see any of the transceiver startups bow out is not surprising, as the optical transceiver market has long been considered overcrowded.

"The business is very tough. There are too many players out there going for too small a market," Evaldsson says. Xenpak and its pluggable-MSA ilk make up what's expected to be a $100 million market in 2005, according to research firm Strategies Unlimited.

Optillion's third and final round of funding garnered $15 million in 2002, but back in 2000, Cisco Systems Inc. (Nasdaq: CSCO) and other investors ponied up an astounding $53 million Round B for the startup (see Optillion Banks $15M and Cisco Invests in Transceiver Startup). The size of Optillion’s Round A was not publicly disclosed.

— Craig Matsumoto, Senior Editor, Light Reading

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