Who Will Buy Intune Networks?
Many optical networking questions will be posed this week during the OFC event in San Francisco, but here's one that isn't about 400G, colorless ROADMs or the derivation of the show floor coffee: Who's going to buy optical burst pioneer Intune Networks ?
An instant response to that question might reasonably be, "What are you talking about?"
Well, Irish optical transport technology developer Intune has been around since 1999, when it was founded by John Dunne (the current CTO) and Tom Farrell (the current Chief Scientist). It has raised more than $100 million and for years has been agonizingly close to the kind of major breakthrough that would help secure its longevity.
But despite a number of trials and engagements with major operators, the much hoped-for big order never arrived and Intune's backers decided in late 2013 not to pitch in another round of cash. As a result, Intune went into receivership (where a third party is appointed to run the company's finances) in December 2013 and made the majority of its staff redundant, leaving it with a headcount of about 40.
This isn't the end for Intune, though. While some of its backers decided against further funding, two of them, International Investment and Underwriting (IIU) and Kernel Capital, decided to provide working funds while the company continues to support ongoing trials and deployments -- including the Exemplar network in Ireland -- and seeks what Chief Marketing Officer Richard Brandon calls "a form of investment or acquisition… an acquisition is more likely," he told Light Reading recently. (See Exemplar Trial Network Unveiled.)
Why would anyone buy Intune?
The answer lies in a combination of hot technology developments and compelling competitive dynamics.
On the technology front, it's just possible that this 15-year-old company has finally come of age. The technology it has been fine-tuning for years, most recently in collaboration with Tier 1 operators, is known historically as optical burst switching (OBS). OBS enables a more efficient use of network capacity through the dynamic provisioning of subwavelength capacity, a capability in part enabled by the separation of the data plane and control plane.
And earlier this year, Intune announced that it had added an open interface to its iVX8000 platform "that allows external standards-based controllers to populate the forwarding fabric of the system." That move, believes, Intune, makes the iVX8000 the first "distributed switch which is capable of extending Software Defined Networks (SDN) across hundreds of miles."
This SDN-related legacy is why Intune has been attracting attention in recent years and, according to Heavy Reading senior analyst Sterling Perrin, continues to do so. "It's not just an academic experiment -- a lot of work has been done with Tier 1 carriers so there's a lot of value in Intune and there's a lot of support for this technology [OBS] in the labs of those Tier 1 operators. It's not in the market's interest to let this company die -- if there was nothing in this, it would have died with Matisse Networks," noted the analyst. (See Rumor: Has Matisse's Optical Burst Gone Bust?)
"Intune and OBS technology have always had a lot of interest from the advanced technology groups of major carriers. BT, through the Exemplar project, Telefónica, Telstra, and Verizon have all been supporters of Intune and OBS," said Perrin.
Indeed, Intune was identified by Telefónica SA (NYSE: TEF) global CTO Enrique Blanco, during a briefing with Light Reading in Madrid, as one of a number of vendors helping the Spanish giant migrate towards SDN and NFV. (See Telefónica Unveils Aggressive NFV Plans.)
"I am a bit surprised Intune ran out of money as I thought the Irish government would support it through what is obviously a very long cycle from advanced research groups to commercial product phases within large operators," continued Perrin.
"Someone should buy them," said Perrin, noting that now is the perfect time to step in when "the price will probably be quite low."
So who should buy Intune?
Another good question -- you're on a roll!
We've already established that OBS is a hot technology that is coming into its prime with the combination of greater pressure on the capacity of data networks and increasing interest in SDN. And it would take years to develop an OBS solution from scratch, so buying Intune (especially on the cheap) would be a quick and easy way into a small but potentially very interesting market.
"Huawei is the only other investor in this technology and that will probably scare the others," notes Perrin. "I believe there is still interest in what Intune has built and some large equipment supplier will ultimately buy the assets."
It's possible, then, that Alcatel-Lucent (NYSE: ALU) might be interested but it has its hands full currently, trying to offload units rather than add to its pile. (See Alcatel-Lucent Shifts Up a Gear to End 2013.)
Infinera Corp. (Nasdaq: INFN) is another possibility, while Huawei might even try to corner the market by acquiring Intune, though that would cause particular problems at Verizon, where Huawei is excluded from involvement as it has been deemed to be a security risk by the US authorities. (See US vs Huawei/ZTE: The Verdict.)
Ericsson, though, is believed to have already made enquiries about Intune, though the Swedish company, which has also been involved in the development of the Irish Exemplar network that is built around Intune's metro transport technology, has declined to comment on such speculation.
Ciena, meanwhile, could easily afford Intune, and is already in a strong position with Verizon and could strengthen that engagement further if it had OBS and Intune in its ranks. In addition, the current CEO of Intune, Arthur Smith, is a former Ciena man and would be in a prime position to liaise with his former boss, Ciena CEO Gary Smith.
Ciena has also declined to comment on any discussions with Intune.
Ciena and Ericsson, of course, are now optical transport and SDN bosom buddies, which puts the potential for a joint bid, or a bid at least supported by both parties, a real possibility. (See Ciena, Ericsson Embark on SDN, Optical Love Affair and Ericsson's Ciena Tieup: It's a Migration Thing.)
Something needs to happen soon, though, as IIU and Kernel won't keep shelling out forever. And like Perrin says, it's not in the market's interests to let Intune go under.
— Ray Le Maistre, , Editor-in-Chief, Light Reading