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Optical/IP

David Huber Pipes Up

LONDON -- Lightspeed Europe 2001 -- The normally shy David Huber, CEO of Corvis Corp. (Nasdaq: CORV), left his timidity at the door today.

Huber came out guns blazing. After a morning appearance on CNN, he touted the benefits of pure optical switching technology and criticized competitors in his keynote presentation here today. Huber even called one competitor’s optical switch a "counterfeit" and stated that other optical networking companies are feeding the public "lies."

Huber's pitch was that Corvis' all-optical technology, which obviates the need for converting optical signals into electronic ones in order to be switched, is the key to recovery in the telecom industry.

Huber said that switches that convert optical signals into electrical ones are costly pieces of equipment responsible for the economic strife in the telecom industry. He said that existing electronic switches would lose value over time as prices for services fall.

“Who would have thought a year ago that the largest equipment companies would be teetering on bankruptcy,” said Huber. “They gave away gear that couldn’t be sold on its own merits and look where it got them.”

While he didn’t identify the competitors by name, Huber's description of the “counterfeit” switch appeared to describe Lucent Technologies Inc.'s (NYSE: LU) LambdaRouter.

"It’s counterfeit. The core is optical, but it misses the point by wrapping it in an electrical interface,” said Huber. “They’ve destroyed the economics [of using an all-optical fabric].”

He also said some of his competitors are perpetuating “The Big Lie” of the telecom industry. He said that “large” competitors, most likely Lucent, Nortel Networks Corp. (NYSE/Toronto: NT), and Ciena Corp. (Nasdaq: CIEN) have been touting a point-and-click provisioning solution that he said is misleading. He said that point-and-click really amounts to carriers pre-provisioning their networks. This means that they must install equipment in the field long before it is actually needed. Then when it’s time to add more capacity, they must roll trucks to install line cards and turn up services.

Corvis’s products include an all-optical switch and ultra-long haul DWDM transport gear. Huber cited the company’s Broadwing Communications Inc. (NYSE: BRW) deployment as the best example of this optical express network. Corvis was able to bring up 38 OC-192 (10 Gbit/s) circuits in less than 60 days for this deal (see Broadwing Cuts Provisioning Time).

Ian Habens, manager of transport engineering for Cable and Wireless (NYSE: CWP) says he was impressed with Huber’s story of an all-optical solution.

“I think he was spot on,” said Habens, after the presentation. “We’re interested in this concept. There seems to be a lot of savings in ultra long haul and though all-optical switching may not be essential now, we are definitely interested in it.”

Currently, Cable and Wireless is using Ciena's CoreDirector for optical switching. It also has a contract with Tellium, though it has yet to deploy any of that gear.

Huber's unusually candid talk comes as the company begins to regain confidence after a dismal 2001 in the networking business. Huber and his sales team promised there are more customers waiting in the wings.

Last month, analysts from CIBC World Markets published a report singing the company’s accolades after it visited Broadwing.

"Large long-haul carriers wishing to stay in business have no choice other than to create next-generation, overlay, all-optical express networks between NFL cities—ie Corvis’ sweetspot,” says the report. “Once a carrier surpasses 500 Gbit/s long haul capacity, the math proves it’s time for a new long haul architecture where the scalability of optics wins.”

Two questions remain: how many carrier customers are ready to spend on next generation optical transport networks? While Habens confirms the need for an all optical switch, he acknowledges that it isn’t easy being one of the first to implement it.

“They call it bleeding edge technology for a reason,” he said. “It can be painful to be one of the first.”

— Marguerite Reardon, Senior Editor, Light Reading
http://www.lightreading.com
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Belzebutt 12/4/2012 | 7:29:03 PM
re: David Huber Pipes Up Where was Huber a year ago with this speech? There are no new products here, didn't all these customers look at this stuff before and turn it down? Where was his sales pitch when carriers were actually spending money?

GǣWho would have thought a year ago that the largest equipment companies would be teetering on bankruptcy,Gǥ said Huber. GǣThey gave away gear that couldnGt be sold on its own merits and look where it got them.Gǥ

And CORV is supposed to be an example of success?
BenGrahamMan 12/4/2012 | 7:28:58 PM
re: David Huber Pipes Up http://clubs.yahoo.com/clubs/c...
LightBeating 12/4/2012 | 7:28:57 PM
re: David Huber Pipes Up Belzebutt,

That is not very honest. Corvis did their IPO with $550M of contracts in hand, later increased to $650M when Williams added another $100M.

Corvis has stopped selling when the customers have stopped buying, period. The same can be said of Nortel, Lucent and the rest.

LB
LightWatchman 12/4/2012 | 7:28:56 PM
re: David Huber Pipes Up Thought Id drop back in and see how my favorite company was doing and was shocked to see "He Spoke".
First He speaks the Gods honest truth.
Second, Its about time, although it probably wouldnt have made a differance a year ago and he knew it.
Look for XP have an impact on internet.
Look into the whole Video editing revoloution, you will be amazed. The future isnt that dim for networking.
Now that Gates has XP plateform on cable, Ill look for movement on access side.
I Miss light Reading and Networking, But Im cranking up Video and believe me its gonna crank up networking.
"True Optical Switch"
LightWatchman


Belzebutt 12/4/2012 | 7:28:56 PM
re: David Huber Pipes Up Corvis has stopped selling when the customers have stopped buying, period.

It's time to get new customers when that happens. Few companies with such great products (I assume) have so few customers. I realize that we have a downturn, but don't other companies of the Coris kind get some kind of revenue even now? Or maybe they don't, and I'm being too hard on them, I don't know.
rjmcmahon 12/4/2012 | 7:28:56 PM
re: David Huber Pipes Up That is not very honest. Corvis did their IPO with $550M of contracts in hand, later increased to $650M when Williams added another $100M.
_______________________

My concerns for honesty occurred when I noticed that CORV and Williams came out of the same VC. During my IBM days that $100M would have been called interplant transfer (IPT) money and no investor would have cared about it.

Whose revenue drove $650M dollars worth of contracts?
rjmcmahon 12/4/2012 | 7:28:55 PM
re: David Huber Pipes Up Look into the whole Video editing revoloution, you will be amazed. The future isnt that dim for networking. Now that Gates has XP plateform on cable, Ill look for movement on access side.
_______________________

Its interesting to note that MSFT almost missed the net because they were focussed on interactive television. Their long term vision may yet prove to be correct.

Predicting who is going to win is a different discussion. Media rights and disposable consumer entertainment technologies doesn't really fit into MSFT core competencies.
rjmcmahon 12/4/2012 | 7:28:55 PM
re: David Huber Pipes Up My concerns for honesty occurred when I noticed that CORV and Williams came out of the same VC. During my IBM days that $100M would have been called interplant transfer (IPT) money and no investor would have cared about it.
___________________________

I should be more careful here as my memory may be incorrect (it was a few years ago that I looked at this). It may have been Sycamore and Williams who shared VCs.

The point is that the source of the revenue should be scrutinized as much or more than the size of the number being published.
flybylite 12/4/2012 | 7:28:55 PM
re: David Huber Pipes Up Two points.....

1st) The "all optical network" may be a reality someday. It's unclear how carriers truly migrate from the O-E-O world to a reliable O-O world. This is made even more difficult when Corvis refuses to disclose the basics of their O-O switch. I remember seeing a picture (I think in the local paper) without detail that showed their switch. All I remember was a spagetti factory gone bezerk with optical fibers. Somehow, I don't see that as a scaleable solution. Other fundamentals, such as component discoveries or improvements have to be made in order to see true cost-effective solutions.

2nd) Didn't Broadwing and Williams (Corvis' main customers) get sweetheart deals before CORV went IPO? Someone told me that each of those carriers made enough money from their CORV portfolio that they used it to but the Corvis equipment. If I've been misled, I'd appreciate the facts.

All-in-all, I applaude Dr. Dave for continuing to preach the all optical story. Sometimes I wonder what success (i.e. sales = dollars) is his basis in fact.....

F-B-L

rjmcmahon 12/4/2012 | 7:28:54 PM
re: David Huber Pipes Up Based on this, I suspect that Huber would also conclude that guns are responsible for war.
________________________

I'd guess that he may be trying to say that the cost of OEO doesn't scale economically, while somehow OOO does.

In general this arguement may be valid, i.e. that driving down the cost to transport a bit is the primary goal. The things I have heard indicate that operational costs are 8x capex costs and that
revenue generating services need OE conversion anyway. If true, these tend to weaken the bit cost arguement made by a OOO technology vendor.
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