Codeon Corp., the modulator and transponder startup bankrolled in part by Corvis Corp. (Nasdaq: CORV) founder David Huber, announced its first contract win today with Corvis archrival Ciena Corp. (Nasdaq: CIEN).

Ciena says it plans to use Codeon’s lithium niobate 12.5-Gbit/s modulators in its MultiWave CoreStream product. Codeon claims it has several advantages over its competitors such as broad frequency response, hermetic packaging, and low-drive voltage (see CyOptics Claims Modulator Milestone).

But Cecil Smith, senior director of electronic systems for Ciena says these advantages had little to do with the purchasing decision and that Ciena selected them purely as another source for the modulator component.

“We have an internal policy to have multiple suppliers,” he says. “The product tested well; it works, so we dropped it into the product. That’s pretty much it.”

Although Ciena wouldn’t reveal how many suppliers it currently has or who those suppliers are, it’s very likely that it is also getting modulators from JDS Uniphase Inc. (Nasdaq: JDSU; Toronto: JDU) and Agere Systems (NYSE: AGR), two of the market leaders in this area.

Neither company is releasing specific details about the contract, but the products have been qualified and are expected to begin shipping to Ciena this month, says Bob Harvey, CEO of Codeon.

Still, it’s a bit surprising that the two companies would be working together, since Optical Capital Group, an incubator backed by David Huber, founder and CEO of Corvis, is one of Codeon’s main investors. Not only are Ciena and Corvis competitors, but Huber was also one of the founders of Ciena before leaving in 1997 to form Corvis. Since leaving, there has been lingering bad blood between Huber and his former company. Ciena is still involved in a lawsuit with Huber over intellectual property (see Ciena Sues Corvis).

But Harvey points out that OCG is only one of several investors that together have contributed $62 million in funding (see Codeon Raises 37 Million). What’s more, he says that Huber is not actively involved with the company and does not hold a seat on the board.

“It’s a non-issue,” he says. “He is one of many investors in the company. Frankly, it’s never come up.”

Codeon’s only other announced trial is with Siemens AG (NYSE: SI; Frankfurt: SIE), but Harvey says the company is also talking to Corvis.

“To my knowledge Huber’s investment in Codeon wasn’t taken into consideration at all,” says Ciena’s Smith. “We are involved in determining whether a component is qualified or not. We don’t get into the business or legal side of things at all.” - Marguerite Reardon, Senior Editor, Light Reading
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