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Optical/IP

Laurel Dates Dacom

Today, edge routing startup Laurel Networks Inc. announced its second customer win, South Korean provider Dacom Corp. (see Korea's Dacom Picks Laurel).

While the company claims to have several trials and active customers on its roster, Dacom is only the second announced customer for Laurel. The company announced a deal with Level 3 Communications Inc. (Nasdaq: LVLT) back in June of 2002 (see Laurel Scores at Level 3).



As at Level 3, Dacom will use the ST200 service edge router to provide Layer 2 virtual private network (VPN) services over a Multiprotocol Label Switching (MPLS) backbone. It will also use the routers to offer a new Ethernet service.

Financial details of the deal were not disclosed.

Under most market conditions, announcing one customer a year would not be a good sign. But considering the current state of the telecom industry, any customer win is seen as a big achievement. Laurel has been rumored to be close to a deal with AT&T Corp. (NYSE: T), but nothing has been confirmed. Company officials claim the company has several customer trials in the pipeline.

It also has a reseller agreement with Marconi Corp. plc (OTC: MONIY), providing Laurel with a channel into government accounts (see Laurel & Marconi Make It Official). Marconi is also selling the Laurel ST200 into some of its North American accounts.

Since Laurel is still privately held, it’s difficult to know how much money the company is actually making each quarter. But Kevin Mitchell, an analyst with market research firm Infonetics Research Inc., estimates that the company is generating between $2 million and $4 million per quarter. He says Laurel likely has about 1 percent of the market. Cisco Systems Inc. (Nasdaq: CSCO) and Juniper Networks Inc. (Nasdaq: JNPR) account for a large majority of sales in the market with 67 percent and 21 percent, respectively.

“Laurel is definitely a serious player,” says Mitchell.

With a second announced customer under its belt, Laurel could look more attractive to a larger company looking to acquire IP edge routing expertise. The company has already been approached by several large players (see Laurel: Startup Holdout? ). Some of its competitors have already been bought. TiMetra, another edge routing startup, was recently bought by Alcatel SA (NYSE: ALA; Paris: CGEP:PA) (see Alcatel & TiMetra Seal the Deal). And Tellabs Inc. (Nasdaq: TLAB; Frankfurt: BTLA) acquired Vivace (see Tellabs Snags Vivace for $135M).

But Laurel doesn't appear to be waiting for someone to acquire it. The startup is continuing to invest in new features and functionality. Just today, Light Reading reported that it's bought intellectual property from Optovation Inc., an optical performance monitoring startup (see Optovation Parts Hit the Market). Laurel officials declined to comment on that rumor.

— Marguerite Reardon, Senior Editor, Light Reading

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