Light Reading's Top Ten Private Companies

It's back. It's brutal. It's the Top Ten Private Companies list.

The times they are a tankin', so we've made adjustments. In fact, we've injected the list with lots of fresh blood. Much of last year's rookie squad has been embarrassed on the floor -- so it's time for most of them to ride the pine.

The new list also reflects an increased amount of feedback from the optical networking community itself. Preliminary lists were debuted at Light Reading-sponsored events – Opticon, and Lightspeed Europe – where the selections were vetted and criticized by conference attendees. Several changes resulted from these presentations.

The list was also affected by some last-minute news events. For example, Ocular Networks Inc. was set to debut in the Number 2 spot, until it was announced just a few weeks ago that it would be bought by Tellabs Inc. (Nasdaq: TLAB; Frankfurt: BTLA) (see Tellabs Nabs Ocular). Though technically Ocular remains a private company until the deal closes, there didn't seem to be much point in naming a company that had already agreed to be acquired by a large public company.

What's different now? The entire market. The Top Ten list is no longer about blockbuster IPOs; it's about companies that have real-world technology, enough cash to survive, or perhaps have developed an effective point product that would make an attractive acquisition (see Ocular). For the most part, we've shunned science fiction for honest-to-gosh products.

Number one? Unisphere Networks Inc. (Nasdaq: UNSP). The steady spinoff of Siemens AG (NYSE: SI; Frankfurt: SIE) has been carefully building revenues and customers for its edge router. Another top entry? Atrica Inc., an optical Ethernet play.

One big change since last spring, when our old, moldy list was launched: The MEMs market and demand for core optical switching technology has virtually dried up, which doesn't bode well for companies like OMM Inc. and Calient Networks Inc. They're off. Axsun Technologies Inc. still has plenty of cash but the buzz has waned. Caspian Networks? Well, word on the street is that the product is very ambitious and that it's time for them to stop talking and start delivering.

Luminous Networks Inc.? The management seems to have gone a little quiet, while the company's technology looks to be stuck in RPR Hell (see RPR: Deadlock Ahead?). We've replaced them with Atrica, which looks to have a cleaner plan for Metro Ethernet – namely, they're actually working with Ethernet.

As for Ellacoya Networks Inc.... We really don't want to talk about it.

So here it is:

Table 1:
Company Name Last Position on List
1 Unisphere
2 Atrica
3 Iolon
4 Appian Communications
5 Equipe
6 Agility
7 Genoa
8 Lightwave Microsystems
9 Procket
10 Calix
Name Last Position on List
Cyras Systems
Name Last Position on List

How are the companies selected? Light Reading’s formula for evaluation is now well-proven:

  • Technology Does it work? And if so, how?
  • People Grizzled CEO in place? Check. Truth-challenged VP of marketing on board? Check.
  • Money It’s not only how much you have -- it’s whom you get it from. These are the same criteria that we use in all our optical networking coverage. We also like help. Keep your ideas and opinions flowing to [email protected]

    The Rules

    There aren’t many rules, but the ones we have are strictly enforced (except when we think there’s a good reason for breaking them).

    Rule #1

    Companies must be privately held [like, duh! – ed]. Public companies aren’t eligible, so don’t even try.

    Rule #2

    The optical networking industry is not a democracy — and neither is the Top Ten list. The editors of Light Reading make the final call on which companies make the cut, and our verdict is irrevocable. There is no higher court of appeal — not even the Florida Secretary of State.

    For the same reason, there’s also no point sending multiple emails suggesting the same company. It’s annoying, ok?

    Rule #3

    The list is dedicated to optical networking systems and components players. Service providers are also eligible, although Light Reading is planning to launch a shiny new services site, with its very own services Top Ten list, some time soon.

    Rule #4

    There is no Rule #4.

    Rule #5

    To be included, companies must explain not only what their product does (the easy bit: it’s called “marketing”) but also how it does it (the hard part: it’s called “engineering”). This weeds out vendors that decline to explain their technology fundamentals from the get-go.

    The technology disclosure rule is an important one, because it makes it less likely that Light Reading editors will end up looking foolish by honoring what we think is, say, a state-of-the-art all-optical switch that then turns out to be a PowerPoint slide of a state-of-the-art all-optical switch.

    It also makes it harder for startups to test the market with a “marketing balloon” announcement, and then change their technology story later.

    Disclosure: Neither Light Reading Inc. nor any of its editors owns equity, stock options, or warrants in any of the companies listed.

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    yomama 12/4/2012 | 11:07:16 PM
    re: Light Reading's Top Ten Private Companies Nice post, what do you think of Celox Networks, a company targeting the same kind of market?

    frickfrack 12/4/2012 | 11:07:16 PM
    re: Light Reading's Top Ten Private Companies No, No, not a bitter ex-employee, stockbroker, et.al. Just a realist who has watched with much amusement the dot-bomb happening!

    First, to get to the "people pay for Cable" argument. Note that according to IDC last year, broadband rollouts for Internet actually DECREASED. Why, a recession perhaps? People who got on to the Internet initially were on for 20 hours a day, it was so amazing to them! And like good Americans, our attention span is quite short, so the fad kinda burned up. (Even AOL admits its users spend less time on the net with each passing year.) And the Gartner Group pointed out that the ONLY ISP access medium that GAINED ground last year, was, GASP, dial-up. Why? It's cheap, fast enough (if you use an ad-killer package to delete all the nonsense).

    As far as Malachite goes, just again common sense seems to indicate this could be a tough sell. The storgae capacity for hard drives is going through the roof, while the cost falls through the floor. Why would I want to have my storgae somewhere outside my buidling, over a fiber link, when I could easily have all the storage I want right here in my building for pennies on the dollar? Just like the DRAM market, capacity increases, prices hit the floor.

    No, it wasn't 3 VP's from Ellacoya (no more disparaging names, I'm gonna try and act my shoe size), my understanding is that 1 VP from Ellacoya who was "relieved of his duties" has been hired at Malachite. Again, if someone can't perform at Ellacoya, where you have no responsibilty (apparently) to ever produce, ship, or support a product, what value do you bring to anyone?

    Lastly, tiadakola notes, although somewhat disparagingly, that "the market changed, butthead, get over it". Yes, it has. And it continues to do so. Too many of these "wunderkind" companies have long rollouts. By the time you get it out there, is it possible that your product could be rendered irrelevant? Many folks thought DSL was going to be huge, but the large telcos lack of enthusiasm, difficulty installing, and spotty availability, have severely dampered DSL's chances. Study after study continues to show that the avergae consumer is UNWILLING to pay for Internet content, yet Ellacoya plows along with the "Cable TV story." We should all be careful out there, and ask ourselves, "Would I pay for this if it was my budget? Or could I do it cheaper, better, faster some other way?"

    frickfrack 12/4/2012 | 11:07:15 PM
    re: Light Reading's Top Ten Private Companies I think it's a pretty similar product to what Ellacoya has trumpeted for years. How about Cisco, and the ENTIRE data communications industry's chant 10 years ago "ATM Will rule the world." Because, everyone needed "QOS Technology", right? Wrong! Ethernet keeps driving along, staying faster, staying cheap, and not requiring wholesale swaps of equipment. Or the whole "PointCast" argument of a few years ago - "the next big thing will be pushing information to the desktop". Yup, how big is that today? Why? it's annoying! Common sense should have said that the idea was flawed in some very basic way.

    How many OC192 routers does the world *really* have a need for? How many "Value Added IP Services" are there *really* worth paying for? Look at Slate, Salon, even Playboy. All have tried a "Pay for it" model, and all have had to retreat. I don't know about you, but when Napster died, I didn't offer to buy my music online from Columbia House, I switched to LimeWire.

    I have to beleive that if anyone thinks they are going to make gobs of money by charging for Internet content, they will be proven wrong. The hackers will probably see to it that anything we want for free on the Internet, we will get. God bless 'em.

    rjmcmahon 12/4/2012 | 11:07:13 PM
    re: Light Reading's Top Ten Private Companies I have to beleive that if anyone thinks they are going to make gobs of money by charging for Internet content, they will be proven wrong. The hackers will probably see to it that anything we want for free on the Internet, we will get. God bless 'em

    This position limits our society.

    People don't work for free. The open source community is asking for money because the investor money seems to be running out and nobody is able to pay for the resources required. What's their future?

    Producers won't produce if consumers don't pay for their consumptions. Stealing just puts everyone one out of business.

    Our society needs to learn this if we are going to reap the benefits of technology. Its time we all grow up and learn the basics of free trade, and that the free doesn't define the price of the goods, but rather that the producer is free to set the price and the consumer is free to decide wether or not to buy.
    rjmcmahon 12/4/2012 | 11:07:12 PM
    re: Light Reading's Top Ten Private Companies On the contrary, my position that the hackers will continue to feed us this content for free EXPANDS our society.

    This misguided position won't expand our society.

    If you care about the homeless, give them a job or teach them something, so they *can* pay for their own housing. Don't steal from AOL Time Warner and claim it expands our society and somehow gives food and heat to the hungry and the homeless.
    frickfrack 12/4/2012 | 11:07:12 PM
    re: Light Reading's Top Ten Private Companies While your post points out some very basics of Economics, it is flawed from such a wide standpoint, as to almost be irrelevant.

    First, I have been on the Internet for over 15 years. I have never had to pay for the content that I view. For once in the human society, we have a chance to give everyone equal footing, regardless of ability to pay. But the greedmasters say "that's not good enough, we need to make money here too." With the average user on AOL paying $25 a month for content, it is not enough to pay $300 a year for content, we must be expected to pay more.

    Yes, producers produce, and users have the option to pay or not. Care to tell that to the homeless or the elderly who cannot afford heat this winter? The producers prodcued, it's up to the buyers to choose to buy. But they can't.

    I for one, believe the Internet must be left alone. Sheesh, we have enough pop-ups, pop-unders, stealth windows, cookies, and what have yous already polluting the place.

    Your argument has merits, but the Internet is the last great equalizer. Let's leave it alone if we can.

    On the contrary, my position that the hackers will continue to feed us this content for free EXPANDS our society. Now, everyone, everywhere has the same access to the same information. Just because you are richer than me, why should you get more content? You already get better schools and colleges, etc.

    blosox 12/4/2012 | 11:07:07 PM
    re: Light Reading's Top Ten Private Companies >If you care about the homeless, give them a job
    >or teach them something, so they *can* pay for
    >their own housing.

    What an awful sweeping generalization.

    Contrary to popular misconception, homelessness is not caused by laziness or (usually not) ignorance. "Get up and get a job" is usually expressed by people looking for an emotional "out" to relieve themselves of the responsibility of acknowleding a failure of our society to provide proper care for certain segments of our population. Homeless are often mentally ill, abused and battered women and/or children.

    rjmcmahon 12/4/2012 | 11:07:05 PM
    re: Light Reading's Top Ten Private Companies What an awful sweeping generalization.

    My hasty response may have been confusing. I never said that laziness nor ignorance was responsible for homelessness.

    I suggested that hiring somebody down on their luck or that teaching someone a trade helps them while pirating things from p2p networks does not. All the people that I have met get a sense of self worth when their works are rewarded with payments and few feel good when others take their property without their permission.

    My experiences with the homeless confirms that many do have mental illnesses. That shouldn't give society a permit not to create jobs for them nor make them 100% dependent on charity. Most still desire a sense of independence even though their conditions require at least some support from others.
    frickfrack 12/4/2012 | 11:07:04 PM
    re: Light Reading's Top Ten Private Companies Wow. Thank you blosox. I figured for sure this list would be that mentality that the poor and homeless are lazy. Your thoughts are right on the money.

    Thanks to rjmcmahon. I'm going to end this thread, though! Enough.

    Have a great day all.

    arbis 12/4/2012 | 11:06:58 PM
    re: Light Reading's Top Ten Private Companies Howdy,

    Anyone know about the relative strengths of these
    3 (optical) ethernet startups? I will be moving
    to the Bay area (spouse is being relocated) in
    a couple of months.

    All 3 of them seem to be well funded and seem
    to have a shipping product. Does somebody here
    know how well balanced these companies are?

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