Cisco Founder Goes Optical
Enterprise business is about 15 percent of the optical market -- about $2 billion a year -- and could be 17 to 20 percent by the end of the year, according to Eve Griliches, an analyst with IDC .
Optical companies like Cisco, Ciena Corp. (NYSE: CIEN), and Nortel Networks Ltd. have been selling equipment to enterprises, but XKL is targeting smaller types of business that might not make a bigger vendor's hit list. "There's probably not enough money there for them to do this," says Michaels.
So, competition from XKL is more likely to come from more specialized companies like BTI Systems Inc. , MRV Communications Inc. (Nasdaq: MRVC), Overture Networks Inc. , or Transmode Systems AB , Griliches says.
She adds, though, that XKL's would be a low-end box, for simple, direct, high-bandwidth connectivity -- as opposed to a more complex optical mesh. That might be just right for some businesses, but competitors see some flaws in that plan.
For instance, BTI contends its microWDM box is a better fit if an enterprise has to share a fiber with others. "XKL has a specialized pizza box, and that's great if you own the fiber, have no traffic on that fiber, and have to use a fixed-wavelength plan," says Glenn Thurston, vice president of marketing for BTI.
Thurston also has his doubts about the command-line interface: "As you start getting into bigger networks, it gets cumbersome," he says, noting that bigger optical networks rely on SNMP-based provisioning equipment.
There's also the fact that ease of use comes with a price. "Our box will probably range in price from the upper $50,000 range to $120,000, depending on how you have the box configured," XKL's Michaels says. "A Transmode box is going to be around 10 percent cheaper or more."
Of course, we couldn't talk to Bosack without at least asking what he thinks of his old company, which he famously left in 1990, selling his stock in the process. Bosack says he wishes Cisco well and still occasionally sees John Morgridge, the president (now chairman) that Bosack and Sandy Lerner recruited in Cisco's infancy. But with its focus on consumer branding, Cisco has become (brace yourself for massive understatement) a different place from the one he left.
"Cisco as it grows has to be all things to all people, and that means that to a certain extent, they have to look like a global marketing organization," Bosack says. "I don't find that business challenge interesting, to me personally, but it is a challenge."
As for XKL, Bosack promises the company is nowhere near the consumer-brand stage.
"Let's face it, folks, this is industrial-grade we're selling here. This is not going to be in anybody's living room any time soon."
— Craig Matsumoto, West Coast Editor, Light Reading
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