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Celite's Out

DSL equipment maker Celite Systems Inc. has ceased operations, Light Reading has learned.

It may seem amazing that an equipment company could go sneakers up at a time when broadband access is so hot, but Celite's approach was a bit left of the average DSL vendor.

Rather than embracing ADSL and its kin, Celite competed with it. Celite offered proprietary access systems that were supposed to combine the best attributes of cable modems and DSL. The pitch: Operators could provision entire neighborhoods for broadband access, like a cable operator, and they could use the standing copper infrastructure, as you can with DSL (see Celite Provisions DSL to MDUs).

Celite's approach, called "broadcast DSL" would have required a specially made modem for each subscriber on the system, a trait that immediately put Celite in competition, not only with DSLAM and cable headend vendors, but with consumer electronics giants that manufacture DSL and cable modems.

While Celite didn't announce its closure, its founder and CEO took a job at another company last week, a sign the company was not having good times (see Navini Nabs Celite CEO). Sources close to Light Reading say the company's final day of business was July 16, less than a year after the company raised its final $10 million round (see Celite Scores $10M More).

Celite was founded in July 2001 and raised more than $26 million during its lifetime from Austin Ventures, Highland Capital Partners, and Comerica.

Executives from Celite did not return calls seeking comment.

— Phil Harvey, News Editor, Light Reading

rbkoontz 12/5/2012 | 1:22:49 AM
re: Celite's Out Well its about time. Maybe broadband access is hot (as the author claims), but there are still far too many vendors chasing too few carrier dollars. Behind Celite there are another 25, yes 25, wannabe broadband companies in startup mode in the US. Most of them are desperately trying to raise money and giving away products to independent telcos to secure the desired "reference account". We are still suffering over funding during the telecom bubble.

Standing above these 25 are 5 established vendors - Alcatel, AFC, Adtran, Lucent, and I must put Calix in this group now that they've approached a $100M run rate. Under even the best circumstances, the 25 start-ups will see maybe 3 liquidity events - the rest will close shop. When that occurs, this may finally be a market vendors can make money again.

It amazes me that VCs continue to dump money into this over funded market. Here's yet another recent example that dumbfounds me: "Amedia Raises $5.25 Million in Private Placement"
http://www.amedianetworks.com/...
firstmile 12/5/2012 | 1:22:48 AM
re: Celite's Out I'm not wishing it on them but....
Oh, and Phil, I love the rat with the life ring. I was laughing out loud!
...first
firstmile 12/5/2012 | 1:22:47 AM
re: Celite's Out Hind sight is really amazing in this business . And Austin Ventures is usually a decent firm.
Looks like they were formed in 2001 (not a bubble play).
Lot's of red flags....
...first
Honda_Elise 12/5/2012 | 1:22:47 AM
re: Celite's Out Designing a product that goes so strongly against
standards as well as a huge installed base of
equipment doesn't make any sense. Also, naming
the company after one of the founders seems bizarre,
arrogant, and stupid. The original investors should
have been more careful.
optiplayer 12/5/2012 | 1:22:36 AM
re: Celite's Out MW,

Excellent post. Unfortunately, this is not the only sector of telecom with far too many vendors chasing the business (optical transport, metro optical, MSPPs etc.).

It amazes me that any VC would fund a proprietary access solution. This is not 20-20 hindsight but basic common knowledge that any experienced telecom professional would understand in 5 minutes - proprietary solutions cannot win today.

Unfortunately, most VCs have no experience in telecom. Lots of HBS grads who, no doubt, know finance and how to structure a deal but none of that matters when the idea DOA.

There are still too many VCs with too much money chasing telecom so there will be many more companies shutting down. Perhaps when all this shakes out the industry can become healthy again.

donkey 12/5/2012 | 1:22:28 AM
re: Celite's Out Actually, the original investors were the ones who named the company. The founder opposed the idea, but AV thought it sounded like a good telecom name. As always, the boys holding the money call the shots.
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