The news may not be its debut, but that the startup has managed to come this far. Looking Glass, which first announced itself in June 2000 (see Looking Glass Comes into Focus), has hardly been in stealth mode since then (see Looking Glass Sees $275M Round and Sorrento Wins With Looking Glass). Indeed, the company's been working hard in a very public way.
The results include a dark fiber and co-location service and Sonet, wavelength, and Ethernet services in nine U.S. cities. All are geared to a customer base of other carriers, including Allegiance Telecom Inc. (Nasdaq: ALGX), Focal Communications Corp. (Nasdaq: FCOM), Universal Access Inc. (Nasdaq: UAXS), and Williams Communications Group (NYSE: WCG), as well as a range of large enterprises.
Looking Glass has achieved all this in spite of the risks. Facilities-based carriers must stake enormous capital in a highly competitive market dominated by firmly entrenched incumbents. And the metro market appears to be nothing short of a crapshoot these days, with some leading analysts labeling it a money pit. Even other "Cisco-powered" startups like Cogent Communications Inc. appear to be struggling against these odds (see Cogent's Reverse Prognosis).
Can Looking Glass succeed where others have struggled and failed?
Yes, says its management. In an interview with Light Reading yesterday, cofounder and CFO Sunit Patel laid out the reasoning:
But Looking Glass faces clear downsides, including stiff competition. Schoolar notes that a small but growing roster of carriers like XO Communications Inc. (OTC: XOXO) have their bid in for the same customers Looking Glass seeks. XO has its own roster of next-generation services and its own facilities.
Schoolar and others say the metro market itself is risky because of the capex slowdown and the relatively slow adoption expected for metro services. "The Ethernet MAN market is in its infancy. Even in 2003, we expect no more than $200 million in revenues from it," he says.
Others agree that the metro market will be typified by slow and hard-won growth. "We believe that most investors incorrectly view the metro market as a nascent, high-growth opportunity," write David A. Jackson, Arif Mawji, and colleagues in a recent report from Morgan Stanley Dean Witter & Co. Instead, growth will be slow, and key customers "will determine the winning technologies."
If that's the case, Looking Glass has at least started out in the right direction.
— Mary Jander, Senior Editor, Light Reading