Optical components

Bandwidth9 Behind Schedule?

Tunable laser startup Bandwidth9 Inc. laid off nearly half its workforce last Friday (May 10), according to a source close to the company -- raising questions over whether the company is in trouble.

Jake Weise, VP of marketing at Bandwidth9 confirmed the layoffs but claims that the company is still solid. "We didn't want to do it," he says. "But as you are well aware, the market is incredibly slow right now, and we needed to lower our burn rate."

About 60 out of 133 employees were let go, with the majority of layoffs concentrated in manufacturing and in middle management positions that were created at a time when the company anticipated much faster growth than it actually saw.

The truth of the matter, according to the source, is that Bandwidth9 anticipated that the market would be stronger and that its product would be at a more advanced stage than it is today. It suffered some technological setbacks that delayed product plans by about a year, the source contends.

The problems centered around meeting the Sonet specifications of 2dB power penalty over 80km. Vertical Cavity Surface Emitting Lasers (VCSELs), such as Bandwidth9's, deliver very low optical power, which created difficulty in meeting the power requirements. That particular issue was overcome by integrating Semiconductor Optical Amplifiers (SOAs) in the G2 product, which was announced in March (see Bandwidth9 Debuts Laser).

Dispersion penalty was a bigger problem. "We were fighting with the design to have a device that doesn't chirp too much," says a former employee. Chirp, which is a variation in wavelength as the laser beam is turned on and off, is a potential problem with directly modulated lasers.

The chirpiness of Bandwidth9's laser actually helped the company win some heavyweight backing from Corning Inc. (NYSE: GLW) last year. The chirp just happened to counterbalance negative dispersion characteristics of Corning's Metrocor fiber, enabling light to be carried for distances of more than 100 meters in tests. Bandwidth9 also got key support from Nortel Networks Corp. (NYSE/Toronto: NT), which demonstrated metro gear incorporating Bandwidth9 lasers at last year's Supercomm show (see Bandwidth9 Scores a Coup).

All the same, news of Bandwidth9's technical problems won't come as any surprise to Larry Coldren, chairman and CTO of Agility Communications Inc., a competitor. Coldren has done a lot of research into VCSELs at the Optoelectronics Technology Center of the University of California at Santa Barbara and maintains that 1550nm VCSEL developments won’t be ready for commercial use for another five years. Bandwidth9 is misleading people by pretending it has commercial products, he told Light Reading at the time Bandwidth9 was getting chummy with Corning (see Bandwidth9 Cuddles Up With Corning).

Weise acknowledges that Bandwidth9 had difficulty meeting the Sonet requirements for dispersion, but he says the problem's been solved in the last couple of weeks. In a slightly desperate-sounding bid to put a positive spin on it, he says that one of the "blessings" was that it gave the company time to refine other aspects of the laser's design, so that "we got a better product out in the end.

"There are no other technical issues outstanding," he insists.

However, the company has been unable to start Telcordia Technologies Inc. testing until the technical issues were ironed out. As a result, it will be approximately another eight months before it has qualified products, whereas other tunable laser vendors have already passed this milestone (see Nortel and Agility in Tiff Over Lasers). That could make a difference to potential customers.

But the big worry with a company like Bandwidth9 is that systems vendors are not quite as enthusiastic about tunable lasers as they once were (see Scattered Signals for Tunable Lasers). Even though the technology has appeal -- for reducing the costs of sparing and inventory, for starters -- systems vendors are more cautious because of the lack of carrier spending.

Weise says it's a waiting game. "I do not know of a single vendor that does not have tunable lasers in their product plans. Of course, that does not change the capex situation." Systems incorporating Bandwidth9's lasers are just going into trial now, he claims. While that is good news in itself, there could still be a significant delay while systems vendors qualify their products with carriers and wait for orders themselves.

Bandwidth9 still has plenty of cash in the bank, Weise contends, adding that with the burn rate it now has, it will probably need to seek new funding sometime during the next year. Its last announced funding round was in September 2000 (see Bandwidth9 Raises $80 Million).

— Pauline Rigby, Senior Editor, Light Reading
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^Eagle^ 12/4/2012 | 10:24:32 PM
re: Bandwidth9 Behind Schedule? Agility is also in trouble. They have consistently overpromised and NOT delivered on their promises.

They have laid off all the sales team. They have laid off over half of the marketing team. They have no REAL design wins. All their wins were with companies that no longer exist or are in desperate trouble.

they hurried up the reliability testing (telcordia) and used specifications defined by marketing team to label the lasers "passed". No other outside entity has reviewed the Agility data and verified the compliance of thier devices.

And even if the first generation has passed, the second gen is different enough (6 section device instead of 4) that it will need to be requalified.

They took poetic liscence with the reliability testing of first generation device. They had canceled taking it through qual last fall due to knowing it would not pass rigorous testing. But had to put it back into testing due to dilution clause in the paperwork they had to sign to get money from VC's. If the device did not pass by March '02, all the founder took a big dilution. Is it any surprise that it did pass? And that Agility got to make the definition of what pass meant? How can a device that was NOT passing reliabilty tests in Decemer '01 be redesigned and majically pass by March of '02? Do the math, there is not enough hours in that interval to get the neccessary testing done. The design for the device was not even frozen as of December '01. And the terms for doing Telcordia testing are that the device design and device manufacturing method be FROZEN and that the device be manufactured on the production line. None of these are true conditions for the Agility laser.

This is just marketing hype.

And just like BW9, NO ONE wants the first generation of Agility devices.

For some reason, Light Reading never announces the bad news about Agility. Wonder why? Could it be that LR has an overly chummy relationship with Agility Marketing?

Someone needs to really dig into Agility claims and do some investigative reporting instead of just regurgitating their internal PR.

Regards other tunable laser vendors. The only ones to my knowledge that have actually passed the rigor of telecordia for tunable lasers are the Fujitsu and Agere narrowly tunable DFB's and the Nortel /Coretek device. the Nortel device entered testing nearly 2 years prior to Agility's.

Now onto the real story. None of these vendors in tunables have any real business today. All are in trouble. they ALL raised too much money and spent it too fast in the chase for a market that won't be there for another 2 years. All of them should have stayed small development teams until the technology and markets were ready.

All have overspent on ramping before they had product or orders.

Agilty is amoung the worst offenders. Did you know they have raised almost $200M and still have no relevant business. Why is all the sales department now gone? Why did they spend over $6M on an Oracle ERP system that still doesn't work correctly after over a year of trying to implement it? when they had no product to ship and there were several smaller ERP programs that would do the job for under 500k? Why did they take out a perfectly good Nortel PBX system and do a complete forklift upgrade to a Cisco IP phone system? Wasting money on first class stuff that was totally useless and unnecccessary.

Time for LightReading to do more indepth work and tell us the real story on tunable lasers, and the tunable laser vendors.

sayonara_hikari 12/4/2012 | 10:24:30 PM
re: Bandwidth9 Behind Schedule? What about the similar(-ish) products from ADC/Alititun and Marconi (i.e. now Bookham) ?

Any rumors of design wins?

Another example of Agility appearing spend-happy in spite of the market reality was yesterday's press-release re. new (ex-Cinta) team & 'state of the art facility' in that well-known cost-effective location, San Jose CA.

Re. other technologies, does Iolon have anyone beyond Innovance signed up yet?
iamnoone 12/4/2012 | 10:24:27 PM
re: Bandwidth9 Behind Schedule? >>>>>>>>>>>>>>>>>>>
Why did they take out a perfectly good Nortel PBX system and do a complete forklift upgrade to a Cisco IP phone system? Wasting money on first class stuff that was totally useless and unnecccessary.

This is only a side point, but is there anybody out there who can point out the advantage of the Cisco IP phones? My company just upgraded from the same Nortel PBXs to the Cisco IP phones and it has been nothing but a headache. And all I really want is simply a reliable dial tone...
rabbit650na 12/4/2012 | 10:24:26 PM
re: Bandwidth9 Behind Schedule? The Agility San Jose operation makes sense to me. Customer support and new product development.

Don't know about Cisco IP phones, but I do know that the Agility new design process is rock solid stable! Have seen the data. Impressive! Much better than the data last fall! Let's see, every 41 days is 1000 hours, so between December 1 and end March they could have how many hours??

I hear they have 5 major design wins with big customers. They are already shipping 20 mW parts - a friend has tested one and it works better than dfb's!
hoffmane 12/4/2012 | 10:24:22 PM
re: Bandwidth9 Behind Schedule? When has any Cisco product be accused of being Reliable?

When will people understand that Cisco systems is in the middle of the road technology wise and cannot/will not produce top class Hardware
kp9988 12/4/2012 | 10:24:16 PM
re: Bandwidth9 Behind Schedule? I checked Bandwidth9s' web site and counted number of press releases. It was about 20 releases since June 2001. Agility, maybe more press releases.

I wonder optical industry is at such a bad shape, too many "full of gag" companies.

Photonboat 12/4/2012 | 10:24:12 PM
re: Bandwidth9 Behind Schedule? My boss and I played "Hatch Graham" bingo once. We did an "over/under", that Hatch would name-drop 15 names within the first five minutes of the meeting. I was out the $1 bet after just 90 seconds.

Go Hatch!
Photonboat 12/4/2012 | 10:24:11 PM
re: Bandwidth9 Behind Schedule? My boss and I played "Hatch Graham bingo" once. We did an "over/under", that Hatch would name-drop 15 names within the first five minutes of the meeting. I took the under, and was out the $1 bet after just 90 seconds.

Go Hatch!

(This guy takes the cake as far as being full-of-it).
ydobon 12/4/2012 | 10:23:45 PM
re: Bandwidth9 Behind Schedule? The BW9 thing reminds me of vodoo manufacturing. The reliability crew is useless the best they can do is stuff beanie babies. Hatch should be limited to get the money and never allowed to make any real contribution, M. Jensen if he survives the stress should go back to university. Needless to say, the name should be changed to the university of bandwidth 9 a satilite campus of UCB...
Vinny Barbarino 12/4/2012 | 10:23:26 PM
re: Bandwidth9 Behind Schedule? An article was published on 5/14 that stated the company laid off 1/2 of their work force. If you dig further, they laid off a 1/3 of their workforce in October. So my estimation is that there is approximately 40 people left, not 60. I think the right idea was there, I do believe though the company did not adapt or anticipate the dynamics occurring around it. NT, LU, and T all spent billions of dollars in upgrading its infrastructure but the NPV of the projects undertaken were negative thus the low stock price (which I do believe is still overvalued). The bottom line is this company came out of labs at Berkeley too early. It may have been in the best interest had Connie and Wupen spent a couple of more years on the school's dime ironing out the power issues before looking for external financing. Do I think the company will look further for external financing? No. The stock options would be worthless if this were to happen. Do I think the company can get external financing? No. Sunk costs. The VCs will liquidate the equipment and sell the idea relatively cheap to a competitor.

Regarding Hatch, I didn't think he was the right person for the job. A great marketer, but if you look at his CV, you will see that he got revenue rather quickly, BUT during the infamous "irrational exuberance" of investors (which includes VCs) many CEOs were doing it. Poor leadership in my opinion.

For all the people who got cut. I would take a long hard look and really determine if you want to stay in the telecom industry. I think its dying. It sure looks that way from the giant bellwhethers who may need bailouts from the country its incorporated in (e.g., don't be surprised to see Canada bailing out Nortel soon). There is a paradigm shift in this country for resources and I definitely do not see work increasing in telecom (unless everyone starts going to higher bandwidth or Bandwidth9).

Vinny Barbarino, you're source for Kotter information.
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