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West Looks East ...

With loads of broadband growth in Asia, more U.S. equipment startups are securing reseller agreements with larger vendors in hopes of cashing in. Recent examples of such partnering include Salira Optical Network Systems Inc.'s deal with Lucent Technologies Inc.'s (NYSE: LU) Worldwide Services and Coriolis Networks Inc.'s arrangement with Nissho Electronics Corp.. Both were announced earlier this week (see Lucent and Salira Target Asia/Pac and Coriolis Wins in Japan).

It's easy to see why U.S. startups are pushing towards Asia -– there's money involved and, provided a startup can find the right channel, newer technologies are more quickly accepted there. Asia/Pacific service provider revenue rose 15 percent from 2002 to $139 billion in 2003, according to Infonetics Research Inc. In turn, capital spending there rose 3 percent to $30 billion (see Asia/Pacific Revenues Up 15%).

Claudio Coltro, senior director, business development for Alcatel's optical networks division in the Asia/Pacific region, told Light Reading last week that some 40 percent of telecom revenues in South Korea now come from broadband -- almost as much as comes from telephony -– a sign that advanced services are catching on there at a much faster rate than in the U.S. (see Can Broadband Save the Day?).

In Coriolis' case, the reseller revelation came as it announced that energy subsidiary Vic Tokai is using its OptiFlow 3000 multiservice provisioning platforms and its OptiFlow 5000 hub nodes. The Japanese carrier is using the gear in three OC-48/STM-16 access rings that are interconnected over a multi-channel DWDM backbone powered by gear from Movaz Networks Inc., according to Greg Wortman, Coriolis' VP of marketing.

With the Coriolis gear, Vic Tokai has the ability to turn up gigabit Ethernet and 10/100-Mbps Ethernet interfaces across the network, according to Manabu Nitta, in Nissho's network infrastructure promotion group. In addition to ADSL and ATM dedicated lines, the carrier can now offer Ethernet private line and Ethernet point-to-multipoint connections, he says.

The deal's a big one for Coriolis. CEO Bob Castle says the deployment's worth more than $1 million, Coriolis's single largest revenue deployment to date. It's also the startup's first international customer since it first partnered with Nissho back in 2002.

Salira's announcement didn't include a customer win, but the terms of its agreement allows for Lucent to invest in the company as time goes on. Lucent chose Salira because service providers in Asia are vocal about needing Ethernet Passive Optical Network (EPON) access gear, a reality that has led to large RFPs and other vendor pairings (see NTT Calls for Ethernet PON and Alloptic Gets Asia-Pac-Happy).

"Our product fills a unique void -- it provides an access point-to-multipoint technology that [Lucent] doesn't have," says Jim Diestel, Salira's VP of product marketing. Diestel says Lucent gives Salira a key advantage in that now -- thanks to Lucent's interoperability labs -- its gear can be tested and run against complementary vendors in tests that might have been too expensive for Salira to fund on its own. The upshot is that it can make sure its gear is attractive to carriers no matter who their current suppliers are.

And, of course, there's the customer perks. "Asian carriers get the benefit of start-up innovation with service, support, and integration from an established vendor," says Anna Reidy, an analyst at Current Analysis.

In the end, though, let's remember why startups talk to the press to begin with: they're all raising money. Indeed, these Asia/Pac connections are crucial for companies such as Coriolis and Salira because startups are constantly working investors for cash while trying to stay competitive with much larger companies.

In Salira's case, it's hoping to close a Series D round of up to $20 million by early next year and hopes to break even by the first quarter of 2005. Coriolis hasn't said explicitly what its fundraising schedule is, but the company says it has raised about $92 million to date, with $18 million of that coming about a year ago.

— Phil Harvey, Senior Editor, Light Reading

BobbyMax 12/4/2012 | 11:09:44 PM
re: West Looks East ... It has become very common for start-ups to market their nmarkets under the service guarenreed by a lager well established company. It is a way for start-ups to survive, but lowers the possibility of their becoming public companies. It is a very risky way of doing business.
BobbyMax 12/4/2012 | 11:09:43 PM
re: West Looks East ... It has become very common for start-ups to market their nmarkets under the service guarenreed by a lager well established company. It is a way for start-ups to survive, but lowers the possibility of their becoming public companies. It is a very risky way of doing business.
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