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Cable/Video

Arris Gobbles Atoga

Atoga Systems has been sold to Arris Group Inc. (Nasdaq: ARRS) for $500,000 and "the assumption of certain lease obligations" (see Arris Acquires Atoga). According to Arris, the tunable optical packet node Atoga created is well suited to its customer base of multiservice operators (MSOs), especially those interested in offering video on demand (VOD).

The sale means Atoga will have a future, if not the one its founders had in mind when the startup emerged nearly three years ago, going on to score $64.5 million in two rounds and make a splashy announcement (see Atoga Systems , Atoga Gets Another $50M, and Atoga Expands Tunable Router).

Back then, the idea was Atoga would help a wide range of carriers expand their networks by offering an optical edge device that combined wavelength switching with IP routing. The tack would let carriers save money by selectively mapping metro services onto the wavelengths best suited to carry them.

Atoga had competition in the optical packet node arena, from the likes of now-defunct Village Networks (see Village Shuts Down Shop ). But Atoga also had an unusual take on the concept, namely, the inclusion of tunable lasers as a means of sending different types of traffic over carriers' nets.

Then the boom bottomed out. With no established players in its customer roster and a technique that was unusual, Atoga seemed sentenced to limbo until leading carriers were once again willing to expand their networks.

"Atoga was in a very risky position, with something having several levels of novelty," says Michael Kennedy, managing partner at Network Strategy Partners LLC.

Village Networks' demise last April seemed an omen of where the optical packet node market might be headed. But Atoga managed to put together a reseller agreement with Arris in September 2002 that seemed promising. It's been coupled in sales with Arris's headend gear to a number of operators worldwide. (No specific customers are cited, although Arris says an announcement of "one or more" will be coming.)

"MSOs need convergence," says Bryant Isaacs, president of Arris's new business ventures group. In contrast with RBOCs, which have disparate voice and data networks, most of these service providers are interested in offering voice, data, and video services on a single hybrid fiber coax infrastructure. Atoga's Optical Application Router (OAR) offers a way for them to handle TDM, IP, and Ethernet efficiently over Sonet and DWDM.

Isaacs says Arris will continue to develop the Atoga box, and Atoga's 30-odd employees, including its founders, will be staying aboard. The company also will stay on in southern California, although it's not clear that they'll be in the same office in Fremont.

According to Kennedy, the sale seems a fit. Cable MSOs need devices that help them route multiple traffic types at their headends, the point at which Layer 3 traffic hits the Internet on the cable MSO network. Ethernet has become a popular way to link these headends, another feature that Atoga offers.

From here on in, Kennedy says, Atoga via Arris will find itself competing more heavily against the likes of Riverstone Networks Inc. (Nasdaq: RSTN), which has also had success in the cable TV market, helping route aggregated multiprotocol traffic.

Interestingly, Isaacs of Arris says Atoga's capabilities might help Arris penetrate more of the market for carriers other than MSOs, but that will come later. Arris's primary goal with the buy was to offer its existing customer base a better way to offer more services.

— Mary Jander, Senior Editor, Light Reading

BobbyMax 12/5/2012 | 12:31:18 AM
re: Arris Gobbles Atoga Arris is really getting nothing in return for buying Atoga. Atoga was unable to remove carrier's concerns regarding its architechture. The company was more focused on propoganda than on improving its products. It is also amazing that they were funded by VCs.
M. Yost 12/5/2012 | 12:31:18 AM
re: Arris Gobbles Atoga Finally, this hype company makes huge money. Congratulations, Atoga's founders. :-(
walter_100 12/5/2012 | 12:31:16 AM
re: Arris Gobbles Atoga Booby,
Could you atleast tell the world which company you (used) to work for?
Seems you interviewed with every startup during the heydays and no one hired you!
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