Blaze Networks Gets $40 Million

Components manufacturer targets the customer premises market

November 13, 2000

4 Min Read
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Is there a profitable future for wavelength-division multiplexing optical networking devices in the customer premises market? Blaze Network Products Inc. thinks so, and its investors do, too, as the company announced a $40 million second round of funding.

Though the premises market is a frontier that hasn't yet provided much in the way of riches for optical networking vendors, Blaze is moving forward with plans to provide low-cost coarse wavelength-division multiplexing (CWDM) components to systems vendors, who may be looking for new markets to mine after the lucrative telco and backbone veins are exhausted.

"The premises market is going to be huge, bigger than the metro and telco spaces," predicts Brian Peters, CEO and co-founder of Blaze, which is based in Dublin, Calif. Though the company has only one announced product -- a 10-gigabit transceiver called the "Afterburner" -- and no list of customers, it has some interesting investors, including Intel Corp.'s (Nasdaq: INTC) Intel Capital and former JDS Uniphase Inc. (Nasdaq: JDSU) CEO Kevin Kalkhoven's venture outfit. Leading the latest round of financing was Sands Brothers & Co.

Though DWDM (dense WDM) equipment has found its way to some of the bigger enterprise players (see Adva Gives Its DWDM More Carrier Appeal ), optical networking "hasn't really tapped the metro space," says Charlie Willhoit, vice president and analyst for J.P. Morgan & Co. (Nasdaq: JPM). "And the home space is still way down the road." But Peters said the premises market -- which to him includes enterprise networks, metro ISP networks, and colocation facilities -- has the potential to be huge, even though it hasn't happened yet.

One big reason is cost, because optical systems are typically located in the million-dollar aisles of your local connectivity hardware boutique. But Peters said that bandwidth needs are increasing at the lowest links in the networking chain, a progression that will soon overtax the older, electronic-based switches and routers that are typical in premises installations today. By producing lower-cost, mass-manufactured optical components, Blaze hopes to help vendors build lower-cost systems for the premises customers, who are on tighter shopping budgets.

Blaze says it will combine some opto-electronics manufacturing wizardry with its patented CWDM technology, which doesn't require the same kind of precision -- and related manufacturing costs -- found in DWDM devices, Peters says.

Blaze isn't alone in its pursuit of the potential providers of short-haul optical systems. Tsunami Optics (see Tsunami Hits the Market), for one, has announced similar plans for CWDM components, which, like Blaze's intended products, place an emphasis on fewer wavelengths. By spacing wavelengths farther apart, CWDM systems can be built using cheaper lasers that don't have to be as precise as those used in DWDM implementations. MRV Communications Inc. (Nasdaq: MRVC) (see MRV Unveils Coarse-WDM Transceiver) is also developing CWDM transceivers.

"Our fundamental premise is that [for CWDM-based systems] distance is not an issue," says Peters, who said that systems using CWDM technology would only support connection lengths of 2 kilometers or less. "At those short distances, problems like dispersion don't come into play. We can let the lasers drift, let the filters drift, unlike DWDM products, which really have to lock the wavelengths down."

Blaze says its Afterburner 10-gig transceiver -- which it plans to make available to OEM switch manufacturers for less than $200 each -- will begin beta testing in three months. Peters says the company plans to follow up quickly with more components, including subsystems that will support 40-Gbit/s throughputs.

"As the bandwidth bottleneck moves up the network chain, we'll keep tracking it with products, even to the desktop level."

Peters says the latest round of financing would be sufficient to get the company to a public offering, though he provides no timeframe. Its lead investor on the new round, Sands Brothers, will likely help the company to the IPO, since Peters describes Sands as "kind of a combination VC and investment bank." Other Sands Brothers investments include laser-manufacturing startup Bandwidth9 Inc. (see Bandwidth9 Claims Laser Breakthrough).

Other new investors in the second round include Kalkhoven, Pettit and Levin Ventures, Crown Advisors, GTG Ventures, the Oppenheimer Fund, Pyramid Technology Investors, the SOG Group, and Wit Soundview (Nasdaq: WITC). They join initial-round investors Intel, Dynafund Ventures, Vanguard Venture Partners, and Wasserstein Adelson Ventures LLP, which were all part of the company's initial funding round of $15 million.

Peters says the company will use the money to build out its manufacturing operations in the Dublin facility and to bring its head count from 80 employees to more than 100 by year's end.

-- Paul Kapustka, Editor at Large, Light Reading http://www.lightreading.com

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