Atoga, Village Networks Scale Back
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