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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LTTSUF 12/4/2012 | 7:33:53 PM
re: Atoga, Village Networks Scale Back Lago,

I appologize to the list for digressing from this most interesting topic, but can't help myself in commenting on the comparison made between Health Care and Tech Marketing "Hype". Obviously, you're unaware of the major lawsuits filed against drug companies because of drugs which were "Hyped" based on "Independent Research";) misleading doctors and ultimately consumers to believe in the desired outcome. Unfortunately, this kind of "Hype" can and has lead to death. Hmmmmm, I think I prefer Tech "Hype". You need to get real, the worst in human nature exists in every industry. Not just on this message board.

Iago 12/4/2012 | 7:33:43 PM
re: Atoga, Village Networks Scale Back I think you may have actually helped me to clarify the point I was looking to make and it is actually pretty relevant to the thread.

The problem with "hype"-- whether its inflated potential revenue from products that wont ever be built or shipped, or from phantom-tested drugs is stems from its motivation.

When the motivation is to make a quick buck, either by selling off a company at the expense of employees and investors, or scamming the public that a treatment works, there will always be dire consequences and innocent victims (layoffs and malpractice victims)

This does happen in all industries, but what concerns me most is the sense that these tactics have become commonplace and standard operating proceedure over the past 3 years for many companies in our space, not just a few random bad-apples

Turtle Poop 12/4/2012 | 7:33:35 PM
re: Atoga, Village Networks Scale Back Did this guys miss or make the window?

Yeah - we all know about hype.

Can anyone tell me how many more months these guys have, or whether they are going to pull the sword from the stone and win lots of business?

rosebudd 12/4/2012 | 7:33:30 PM
re: Atoga, Village Networks Scale Back > Can anyone tell me how many more months these
> guys have, or whether they are going to pull
> the sword from the stone and win lots of
> business?

No. But I can tell you all lottery winning numbers nationwide for the year to come.
mrtelecom 12/4/2012 | 7:31:34 PM
re: Atoga, Village Networks Scale Back Weird thing about Alphion. Just spoke to a sales rep. He just told me that when he calls his customers at Alphion none of them return his calls. The odd thing is that the voicemails are all rerecorded with someone elses voice saying that the employee is out and will return your call.Talk about stealthy. For a company to go to that extent that is pathetic. He told me that they are basically selling everything they got there including their intellectual property. If you don't believe me give them a call and call several extentions. I guess this further confirms that they are out of business.Pretty sneaky for someone who has a total of 51.9million in funding.
mrtelecom 12/4/2012 | 7:31:34 PM
re: Atoga, Village Networks Scale Back yes these guys are dead. The parking lot has 10 cars left. It must be all managment.
manoflalambda 12/4/2012 | 7:31:32 PM
re: Atoga, Village Networks Scale Back Yeppers...dead or severely pruned. Despite what "hobbit" said a while back, a long lost soul resurfaced and confirmed the cut of all software, system engineers and non-component hardware engineers. Now whether they can resurface as a component company, or as someone said, they are burning the rest of Battery's money, remains to be seen.
lightningman2 12/4/2012 | 7:27:21 PM
re: Atoga, Village Networks Scale Back Noitall,
The VP of Sales, Brian Noel was put on a rocket sled along with the rest of his uncompetent team last Friday 12/8. Stayed tuned for his next appearance at another unsuspecting optical startup. Well at first you don't succeed.....
noitall 12/4/2012 | 7:27:20 PM
re: Atoga, Village Networks Scale Back thx for the heads up lightningman. let's wish him well. as for atoga...well, let's just hope someone comes along and buys 'em. you hate to see another flop in this valley of death.
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