Optical/IP Networks

Atoga, Village Networks Scale Back

Atoga Systems and Village Networks Inc., the startups most associated with the nascent market for a type of networking gear called optical packet nodes, have suffered layoffs recently, throwing the viability of the sector into question.

Optical packet nodes are devices that combine wavelength switching with IP routing -- not a simple task by any means (see Optical Taxonomy, page 10). Indeed, analysts have hounded startups for months with questions about the issues involved in packing two hefty technologies in one box (see God is Dead).

Atoga and Village have stood firm, maintaining their wares can save carriers money by selectively mapping metro services onto the wavelengths best suited to carry them. Both companies were well funded intially -- Atoga scored $64.5 million in two rounds (see Atoga Systems and Atoga Gets Another $50M), while Village got about $50 million in two rounds (see Village Networks Has $40M 2nd Round). Both have claimed to be in trials and gaining market traction.

Lately, however, the reduction in carrier capex has left the pair in a perilous position. Without a track record among existing carriers, it's increasingly unlikely they'll be able to get any sizeable installations until providers are once again willing to expand their networks. And even then, it's a question as to whether customers will opt for an unproven technology.

Both startups now face the possibility that they may be ahead of their time.

Atoga confirms that it's suffered a layoff. "We made a strategic decision to strengthen our financial position to enable us to meet the changing needs of the market," writes P.G.K. Menon, cofounder and VP of marketing, in a note to Light Reading.

Menon declines to give out figures as to the number of employees the company lost, but he says the firm now has "between 75 and 100." Back in May 2001, the firm told an online recruitment firm advertising at the Networld+Interop trade show in Las Vegas that it had 120 employees, which indicates it's lost anywhere from 16 percent to 37 percent of its workforce.

But Menon's far from throwing in the towel. The company has four trials going, he says, although he won't say where. Earlier this year, the company was said to be trialing its wares at AT&T Corp. (NYSE: T).

Menon also says Atoga's gear now features tunable lasers, which he says minimize sparing costs for carriers, enable them to increase network capacity without truck rolls, and "satisfy demand variability by simply tuning to the right wavelengths."

While Atoga struggles to make its point, Village Networks is similarly challenged. Spokespeople confirm that the startup has laid off about one third of its staff, leaving them with about 80 employees. They say Village has one lab trial going on in Asia, with three more on the drawing board, also in Asia.

Unlike Atoga, Village isn't interested in adding tunable lasers to its wares. "We think tunables are mainly to simplify inventory, and they increase the cost of our product," a spokesperson says.

What's next? It's hard to say. Other companies involved in this space, albeit for the network core, haven't done well: Ilotron and IPOptical were scuttled (see Ilotron Hits Hard Times and Altamar Buys Ilotron Remains). Luxcore Networks Inc. has changed its business plan (see Luxcore Pulls a Switcheroo). And news from Accelight Networks Inc. and Chiaro Networks has been minimal.

— Mary Jander, Senior Editor, Light Reading
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Jey 12/4/2012 | 7:35:08 PM
re: Atoga, Village Networks Scale Back Atoga laid off 48 people last week. As an former employee, I have to say that
this is a shameless and super-hype company I have ever
met. Acturally, I joined Atoga after SuperCom, was
induced by thier many "exciting news". After I worked
there, I found all the news are cheating!!!!

* In Jan/01, Atoga said they were doing field trial
and the product (OAR5) will be released in 3/01.
Acturally, the box never worked, because AT&T has a
close relationship with P.G. Menon (one of Atoga's
founders), Atoga only stored the box at AT&T and they
released above news, which is absolutely untrue.

* Atoga sent empty box to SUPERCOM in July, they
actually "paid" to get the "golden prize". Rumor also
said they paid many magzines, to publish good news for them .
C++neyt +űzveren (CEO) presented everywhere that Atoga's
system is using tunable laser, acturally, so far,
Atoga only received 18 modules of tunable lasers (this
can be confirmed with Agility!!! http://www.lightreading.com/do.... The truth is Atoga
NEVER used tunable laser to make system. Did anyone
see Atoga's tunable laser system demo?

* Atoga has no TRUE optical engineers. I searched Mark Lowry's
22 published papers (Atoga's Photonics Director), he
worked in LLNL for 17 years, but NONE is related to
optical communcation. Can you believe it? People who
are close to C++neyt said that he hired Mark because of
his "Ph.D" and "LLNL", so the manager team "looks
great", he didn't really care about his background.

Atoga released tons of shameless news? The only reason I believe is that Atoga was trying to sell the company. They hoped the
hype would atract some companies (like Cisco) to
acquire it ( like Nortel acquires Xros by concept last
year). But this is impossible in current economics.
clearly I believe this company will certainly die

opticguy 12/4/2012 | 7:35:06 PM
re: Atoga, Village Networks Scale Back I was interviewed by Altoga mgmt a year ago and I declined their offer, because I had concerns about the quality of the people interviewed me and also other companies were better in many aspects, compared to Atoga. In the current environment, people will show their true colors !!!!!!

iamnoone 12/4/2012 | 7:35:05 PM
re: Atoga, Village Networks Scale Back Great specific insights! Too bad it requires someone to be on the inside to figure all these things out. But it certainly helps future job seekers know what questions to ask, and to look for fishy smells...

However, there remains the question about how someone can raise any money if he/she doesn't resort to hype? After all, the reason he/she needs the money is because there is no product to sell, and the technology doesn't work (yet).

Even being an optical engineer, I can barely distinguish between what can and cannot be done i.e. what is doable vs what is pure hype. But this post about Atoga describes stuff beyond hype, going into outright dishonesty.
MKTG_Hack 12/4/2012 | 7:35:05 PM
re: Atoga, Village Networks Scale Back All I know is that a recruiter told me to stay away from Atoga at all costs.
mrtelecom 12/4/2012 | 7:35:05 PM
re: Atoga, Village Networks Scale Back See, this is further proof that Village is in the toilet. They laid off 90 percent of their staff and are waiting till d-day. I don't speak bullshit.

One article down another to go(alphion).
hiddentiger 12/4/2012 | 7:35:04 PM
re: Atoga, Village Networks Scale Back "Even being an optical engineer, I can barely distinguish between what can and cannot be done i.e. what is doable vs what is pure hype."

What is doable- is usually phase 1 on the product roadmap.

What is pure hype- is usually phase 2. ;-)
hawkman 12/4/2012 | 7:35:03 PM
re: Atoga, Village Networks Scale Back I have visited both of these companies as a vendor. Neither of them ever had any idea what they wanted. I left there happy that I did not make a sale, because I didnt want to our products assosciated with them.
akulla 12/4/2012 | 7:35:01 PM
re: Atoga, Village Networks Scale Back My point continues about consolidation not only of Service Providers but for companies with no product as well. Market acceptance is a requirement for startup in todays new world. VC is scarce and gone are the days of build it and figure out what it does latter (Village and Attoga exemplify this concept). I am sure why recovery will not start is highlighted by these two "ponzi" companies.

It doesnt matter if its 80 or 20 person layoffs! I bet if you looked under the cover at either one, the Layoffs would look far more substantial! I am sure they are both in the conserve capital and hang on for better days mode, while neither company has substantely changed market direction or product focus, on assumes that both CEO's of Village and Attoga are convinced that nothing has changed in the market for the lats 12 months? Or worse yet, good times are just around the next quarter.

Compaines must either prove market acceptance or die in this enviroment...and soon!
Attoga and Village have done neither in the last 18 months, and therefore, my any definition of a market driven economy, cease operations.

I am not anti startup, but others in this market have quietly done. I am sure Attoga/Village however, like most of these super hyped companies have missed the market,or the Market has rejected their technology, or most likely, have had no real product at all.

Having companies like these create a resource drain a tight economy helps no one except the hype machine companies advertising budgets (why did it take L/R so long to mention layoffs at it some of its darlings? and then ask such "Softball Questions?" It MUST be the advertising dollars!)

My appologies to the Village person who corrected my previous comments on "Outside Executive team at Tellium. (I am sure you will be reading this)

To clarify:My point it that Tellium has a Buisness person (bottom line driven) running the company vs. research (technology driven). Tellium had a successfull IPO with this CEO at the helm. It's not the LU background, but what they did while at LU! My point was that Village appeared to be built on the same model as the Tachion. They both did not built a "real" products, but a "Proof of Concept shop". It appears both never delivered, and both had founders at the helm, and both were part of the "Silicon Parkway" down in NJ.

As far as your point about "Elite" researchers at Village vs. "Hacks" from Tachion; If product never ships, whats the difference?
mrtelecom 12/4/2012 | 7:35:01 PM
re: Atoga, Village Networks Scale Back Great point! You speak the truth my friend
poster 12/4/2012 | 7:35:00 PM
re: Atoga, Village Networks Scale Back lightbulb:

anyone can have a great idea, as your handle indicates. but only a few people/companies have what it takes to EXECUTE, which is a the real challenge. 'vision' doesn't mean jack if you can't deliver.
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