Battle Begins Between FDM Twins

So who’s winning the race? Right now Kestrel looks to have the lead. It has 180 staff, has raised $180 million, and says it will announce a shipping product next week. Rumors circulating the optical networking grapevine have it that it’s also set to announce a ‘kingmaker’ account this week. Centerpoint, on the other hand, has 70 staff, and has raised $17 million (although it says it will announce a ‘very large’ third round of funding in the next two weeks). It’s not expected to announce its product until later in this quarter. And that product won’t be generally available until the summer.

There are a couple of reasons why Kestrel is in the lead. First, it had a big head start. Kestrel was founded in October 1997, whereas Centerpoint didn’t get off the ground until March 1999. It’s also working on a simpler product. Essentially, it’s building a bolt-on box that can be used to front-end installed Sonet, DWDM or other optical hardware. Centerpoint, in contrast, is working on device with full networking capabilities -- including Sonet add drop multiplexer (ADM) features. That means it can be used to replace, rather than enhance, installed kit.

There’s more at stake here than just the fortunes’ of the two companies and their employees. Some of the optical industries most powerful players have lined up behind Centerpoint and Kestrel. Centerpoint’s funding comes in part from internetworking titan Cisco Systems Inc. (http://www.cisco.com). Kestrel’s supporters include optical component monolith JDS Uniphase Corp. (http://www.jdsu.com).

FDM will face competition from other new technologies designed to ratchet up bandwidth on optical networks. For example, both OptiMight Communications (http://www.optimight.com) and Templex Technology Inc. (http://www.templex.com) are working on products that use CDMA (Code Division Multiple Access) techniques to increase capacity.

By Stephen Saunders, US Editor of Light Reading (http://www.lightreading.com)

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