Calient Shuffles to Subsystems

Calient Networks Inc., one of the few all-optical switch startups left standing after the telecom bust, has unveiled a subsystem version of its product for customized applications.

The product, dubbed the PX, has been in the works for a year and is set to ship in October. Several customers have agreed to buy it, including Montana State University, which is using it in a telecom research lab; and the Photonics Technology Assistance Program, which provides photonic devices for university use and is sponsored by the U.S. National Science Foundation and the Defense Advanced Research Projects Agency.

By offering a subsystem, which can be customized to fit a range of uses, Calient hopes to get other would-be customers "comfortable" with optical switch technology and see how it might work for them. The vendor sees a future for the PX in vendor test labs, as a means of creating a kind of instant optical network, and in grid computing, linking computers and storage. Calient already has its gear installed in a grid project (see Ciena Touts a Piece of the Grid).

The PX is based on the 3D MEMS (micro-electro-mechanical system) technology deployed in Calient's DiamondWave PXC system, an all-optical crossconnect whose announced customers include Chunghwa Telecom Co. Ltd., Japan Telecom Co. Ltd., and KDDI Corp.

At least one analyst thinks Calient's behind schedule in releasing the PX. "Well, it's about time!" says Mark Lutkowitz of consultancy Telecom Pragmatics Inc. "They probably should have done this a year-and-a-half ago. I don't know what held them up."

Indeed, the subsystem route is well worn by other all-optical switch startups. It's led to mixed results: Some have disappeared, like the late OMM Inc. (see OMM: The End Is Near) and Network Photonics (see Network Photonics Shuts Down). Altamar, another company that sold its wares as optical subsystems, was bought by JDS Uniphase Corp. (Nasdaq: JDSU; Toronto: JDU) in July (see JDS Uniphase Picks Up Altamar).

Calient CEO Charles Corbalis says the company hadn't been convinced that sustaining a separate subsystem business would be worth it. Now, though, he thinks the prime prospects for the PX, namely, telecom equipment makers, are kicking the tires on optical switching again, after putting the technology on hold for a couple of years.

Calient is different from its failed predecessors in several important ways, Corbalis says. "We were fortunate to get a product to work," he says wryly. Also, Calient's technology supports up to 256x256 ports, making it larger than others that have tried this market and failed, he says.

Finally, Calient isn't giving up on its system business in order to move to a subsystem product, Corbalis says.

Still, there are challenges ahead. Based on the preliminary customer announcements, it doesn't exactly sound like a blockbuster market. Real growth may take a long time. What's more, the prospects for subsystem use may take a while to solidify. After all, grid computing is still a relatively new concept, even though prospects are good (see Grid Networking).

"There's no way to tell when the market will take off. But this at least reduces risk and puts [Calient] in a more healthy position -- attractive to a system vendor who may want to buy them down the road," Lutkowitz says.

— Mary Jander, Senior Editor, Light Reading

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zettabit 12/4/2012 | 11:29:05 PM
re: Calient Shuffles to Subsystems For those who have followed the rise and fall of photonic cross-connects and corresponding market (or rather, the lack of market), you will immediately noticed that the term "PX" was actually what Nortel call the XRos photonic cross-connect after the acquisition. The formal name was the OPTera Connect PX. In an ironic twist of fate, the barely surviving Calient has chosen to hex its latest product by omninously naming it after a previously failed competitor.

Ala jecta est
Belzebutt 12/4/2012 | 11:29:03 PM
re: Calient Shuffles to Subsystems There is probably a market for these things, although probably not in service provider networks, and probably not in the million-dollar whiz-bang variety like the OPTera PX or LambdaRouter. If they can make cheap versions of these things to use as intelligent patch pannels or experimental GMPLS devices I could see that happen...
redface 12/4/2012 | 11:29:03 PM
re: Calient Shuffles to Subsystems I wonder how much money they have left in their bank, and whether they are going to do another round of financing.
whyiswhy 12/4/2012 | 11:29:02 PM
re: Calient Shuffles to Subsystems I bet they could use these things for overhead projectors or televisions, if they could make them small enough, and maybe 1024x780 elements....maybe even get TI or somebody like that interested...



jssreenath 12/4/2012 | 11:29:01 PM
re: Calient Shuffles to Subsystems It was a great idea, Xros cashed in, but the rest have died, Calient is next. I am not knocking the idea, the products work but selling to several universities isn't going to cut it. It is an idea that will succeed, but not with this generation of companies.
dodo 12/4/2012 | 11:29:00 PM
re: Calient Shuffles to Subsystems USD 275M in the 2nd and 3rd rounds.

Calient Networks receives $225M in Jan 2001
VC Firms: American Express
Amerindo Investment Advisors Inc.
Bluestream Ventures
J&W Seligman & Co Inc
Juniper Networks
ONI Systems
TeleSoft Partners

23-MAY-00 Calient Networks receives $50M ( 2nd round)

VC Firms: Enterprise Partners
Greylock Management Corp.
Juniper Networks
Storm Ventures
TeleSoft Partners

purna 12/4/2012 | 11:29:00 PM
re: Calient Shuffles to Subsystems From Calient's website I infer that it has raised close to $280 million in funding. Hence to succeed (i.e. to prevent its VC's from pulling the plug), the company has eventually to achieve a valuation of say $500 million (at least have the prospect of achieving it). Based on typical sales/valuation ratios, I would expect this to represent a couple of $100 million in revenues per year. If Calient goes into the subsystem business, it will not be able to sell optical switching gear for more than $5000 per equivalent 10G port. Even if you deploy Calient gear in every network node on earth, you will not get to those levels of sales.

But this might be too simple...
TelCoEngineer 12/4/2012 | 11:28:59 PM
re: Calient Shuffles to Subsystems It is too simple.

Sunk Cost Definition
A cost incurred in the past that will not be affected by any present or future decision. Sunk costs should be ignored in determining whether a new investment is worthwhile.

Doen't matter how much it raised in the past. Only matters how much the VCs can make on the future investment vs. what they could do with the capital somewhere else.
jamesbond 12/4/2012 | 11:28:55 PM
re: Calient Shuffles to Subsystems Recent estimates pegged Calient's valuation at $60M

You gotta be kidding me. 60M for this crap?
lame_duck 12/4/2012 | 11:28:55 PM
re: Calient Shuffles to Subsystems Or perhaps more to the point: What matters is what a new round of investors could expect to earn after picking Calient up in a washout round. Recent estimates pegged Calient's valuation at $60M (not that I think there was any rocket science to coming up with this figure). Lowers the bar a bit for whether someone might choose to put money in.
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