Corning Chops Wavelength Blocker
Corning also is closing down its Fountain Valley, Calif., facility, cutting roughly 190 jobs and resulting in a restructuring charge of $20 million to $30 million against first-quarter earnings.
From Corning's point of view, the news is not unexpected. The company is fighting to reach profitability and has indicated that it is reconsidering its future in the photonics industry (see Corning: Profits on the Horizon). Earlier this month, company executives told investors to expect further winnowing of Corning's photonics product line, and they admit Corning may have to exit photonics altogether.
What does it mean for Corning's customers? Companies such as JDS Uniphase Corp. (Nasdaq: JDSU; Toronto: JDU) also make wavelength blocker components (see JDSU Parades Picky Part). But adapting an existing switch design to fit the part from another vendor could take time and money, which most systems vendors can ill afford right now. With the market so small right now, systems vendors may not consider the effort worthwhile, so Corning's move could trigger some product cancellations.
By optical switch standards, Corning's wavelength blocker appeared to be a success, having been chosen by a number of key vendors making all-optical switches and reconfigurable add/drop multiplexers. Both Ciena Corp. (Nasdaq: CIEN) and Marconi plc (Nasdaq/London: MONI) were announced customers for the part, and it's likely that Corvis Corp. (Nasdaq: CORV) was also using Corning components as the guts of its all-optical switch (see Ciena Cleans Up OADM).
Ciena, for one, claims to be prepared. "Rest assured, we have alternative sources for any components for which we were relying on Corning," says spokesman Glenn Jasper.
Marconi could not be reached.
The wavelength blocker, which is based on liquid crystals, works as a high-performance version of a dynamic gain equalizer, which can attenuate individual channels down to virtually zero. This way, a carrier can drop channels from a DWDM stream without having to demultiplex the signals first (see Dynamic Gain Equalizers Diversify).
The key benefit, say Corning officials, is that the overall loss of the optical switches is less than for other types of switch fabric such as micro-electro-mechanical systems (MEMS). And this is what led to the wavelength blocker's apparent popularity.
Corning says it shipped more units than all competitors combined. But it is canceling the product because the market is still small in absolute terms, and volume sales will take longer than expected to emerge.
"It's an advanced product in an industry that doesn't have a need for advanced products right now," says Corning spokesman Daniel Collins.
That's not necessarily good news for competitors such as LightConnect Inc. While it's nice to lose a competitor that was "clearly the incumbent," it's also sobering to be reminded that the market remains sparse, says Yves LeMaitre, LightConnect's vice president of marketing.
"We need a big established player -- thank god JDS is still on that list," he says.
LeMaitre contends that the MEMS approach is preferable anyway -- an unsurprising attitude, considering LightConnect sells MEMS-based optical components. With MEMS, the option of a multiport configuration is possible, where a 1xN device could both block and switch wavelengths among multiple intersecting rings.
Customers are asking about such a device for use in metro networks, LeMaitre says. The obvious question will be cost, as the MEMS approach will have to prove itself cheaper than discrete components.
— Pauline Rigby, Senior Editor, and Craig Matsumoto, Senior Editor, Light Reading