Sycamore Networks Inc. (Nasdaq: SCMR) has quietly outsourced a crucial component of its optical switchstrategy.According to sources familiar with the deal, it’s providing funding forMintera, a startup based in Chelmsford, Mass., that is developing 40-Gbit/soptical components for use in ultralong-haul networks.
If successful, the gambit could allow Sycamore to leapfrog its archrivalCorvis Corp. (Nasdaq: CORV) and others, in the race to deliver ultrahigh-speed, ultralong-haulproducts to carriers (see Vendors Prepare for 40 Gigabit Future). Ultralong-haul technologyoffers the potential to vastly reduce the cost of installing core networksby reducing the amount of regeneration equipment that service providers mustinstall to boost optical signals.
“It makes sense for Sycamore to fund something like [Mintera]. It’s a smartuse of resources,” says Scott Clavenna, president of PointEast Research anddirector of research at Light Reading. “Ultrafast 40-Gbit/s OC768 is veryvaluable for leadership positioning. Anyone with access to that technologywill have a clear edge over suppliers stuck at OC192.”
If Mintera is successful in developing its products, the most likelyscenario is that Sycamore will acquire the startup, incorporating itstechnology into its product line -- specifically by providing high-speedinterfaces on its SN 10000 optical switch.
Sycamore declined to comment on any aspect of this story.
Of course, Mintera is not alone in developing 40-Gbit/s components. Nortel Networks Corp. (NYSE/Toronto: NT)has already demo’d a system that can transmit data at speeds of 40 Gbit/sand above. It says it will ship next year. Mintera also faces stiffcompetition from smaller players, such as CyOptics Inc..
How important is it for Mintera and, by extension, Sycamore, to win the 40-Gbit/s race? If historical precedent is anything to go by, it’s key.Consider that Nortel’s current success in optical networking has largelybeen predicated on the fact that it “saw the ball” earlier than itscompetitors, snagging a three-year lead in the development of 10-Gbit/stechnology. 40 Gbit/s represents the next speed barrier.
Mintera’s intriguing staff lineup bodes well for its odds of succeeding. Mintera’s founder,Menachem Abraham, has a proven track record in the networking industry, withsuccesses at both Chipcom and Prominet.According to Light Reading’s sources, he will shortly be joined by a trio oftop engineers -- two from Bell Labs and one from MIT. (Light Reading hasbeen provided with the names of the engineers but is not releasing thembecause they have not yet left their current employers.)
Mintera is intriguing for another reason as well: It exemplifies the continuing erosion of venture capital's position in theprocess of funding optical networking startups. Mintera’sfunding, which is rumored to exceed $20 million, appears to comeexclusively from three non-VC sources: Sycamore, Menachem Abraham, andJim Murray (formerly a VC at Columbia Capital, who now has set up shop as anindependent investor). Abraham and Murray confirm that they have put their own money in Mintera.
VCs are miffed. “We wanted a piece of this -- so did everybody else. Wetried and failed to get in the game," said one, off the record.Another VC, also speaking anonymously, sounded a note of caution. “You wantthe VCs’ spin? Sure. The company might be bought, fine. But tell me whathappens if it isn’t. It will be real interesting to see how well individualsand companies will be able to fund startups over a long period of time.”
Right now, the biggest blot on Mintera’s copybook could be its company name,which has been poorly received by most marketing types. “What, are theyushering in an age of mint?” wisecracks one industry observer. But if itends up being spun in by Sycamore, the name problem is one that Mintera won’t have to deal with for long.
Mintera’s Abraham told Light Reading via email that his company has “noagreements with any partners” and that it has “not had a round of externalfinancing.”
-- Stephen Saunders, US Editor, Light Reading http://www.lightreading.com