Zhone Gets Eluminated

A range of access gear's going into the Zhone, but passive optical equipment will be left behind

February 18, 2003

3 Min Read
Zhone Gets Eluminated

Zhone Technologies Inc. has acquired NEC Eluminant Technologies Inc., a vendor of access technology and PON (passive optical networking) gear, the companies announced today (see Zhone Acquires NEC Eluminant). Terms were not disclosed.

Zhone is acquiring a digital loop carrier, Sonet ADM, fiber access mux, and M13 multiplexer from Eluminant, which Zhone says will help it offer "complete converged voice, data, and value-added services solutions" to carriers.

But don't expect Zhone to peddle PONs -- a technique wherein optical bandwidth is divvied among several endpoints via the use of passive splitters -- anytime soon. Even though many of Eluminant's public announcements, including its latest (see NEC Eluminant's PON Gets NEBS), have centered on PONs, Zhone passed on the passives.

More surprisingly, NEC itself has ditched its PON plans. Sadly, while Eluminant released a PON product last year (see NEC Eluminant Unveils PON), the company seems to never have signed a customer for it. Jim Holley, senior VP and general manager of Eluminant's access solutions division, says parent NEC closed Eluminant's PON development about a month and a half ago, letting go all staff associated with PONs, but retaining the intellectual property. That intellectual property will stay with NEC USA Inc. after the sale of Eluminant. At some point, perhaps when the FCC mandates opening up the access market, Holley suggests, NEC may reconsider PONs. Until then, it's thumbs down.

Zhone seems one with this approach. While Zhone's local access products support fiber connections, the company doesn't have any PON capabilities right now. Carriers are spending on copper access at the moment, and while there are some "select" fiber access deployments, Zhone's going where the action is.

Indeed, today's announcement appears to bolster an overall bleak appraisal of the PON market's growth prospects. While several vendors are optimistic, their hopes have yet to be realized (see Alloptic, Salira Close to New Funds). For now, the market's supporting only one or two vendors.

The broader access market is perennial, though, and Zhone is banking on its ongoing viability. Largely, Zhone has focused on a strategy of buying existing revenue streams. The Eluminant buy is the eighth in Zhone's acquisition campaign, which, along with gear developed in-house, is meant to bulk up the vendor's profile in local access.

So far, the company has kept up a steady flow of international contract wins (see Ecuadoran ISP Picks Zhone, Tricom Uses Zhone's MALC, and BT Picks Zhone in Ireland); and this acquisition will give Zhone entrée into "eight of the top ten North American carriers," says David Markowitz, VP of marketing at Zhone.

Meanwhile, Eluminant will become part of Zhone's engineering division, with employees working out of the current Eluminant R&D facility in Hillsboro, Ore. A decision on whether or not to keep Eluminant's Chantilly, Va., headquarters open is pending.

Neither Eluminant nor Zhone would disclose how many employees each company now has or how many will survive the acquisition. Zhone will take from Eluminant "enough people to support the transition and maintain the customer base" for these products, according to Holley. Employees associated with maintaining development of the product will likely stay on, but, he cautions, there are redundancies in administrative jobs.

In mid-2002, Zhone was reported to have just under 500 employees, after a layoff suffered in March (see Zhone Rezhones (Again)). Eluminant's staff never seems to have grown much over a high of about 180 employees, a figure reported in a distributor press release in March 2001.

— Mary Jander, Senior Editor, Light Reading

Subscribe and receive the latest news from the industry.
Join 62,000+ members. Yes it's completely free.

You May Also Like