Lucent's LambdaRouter Turns Japanese

Lucent Technologies Inc. (NYSE: LU) announced today that Japan Telecom has signed a contract for its all optical switch, the WaveStar LambdaRouter (see Cisco, Juniper, Lock Down Internet Router Market ). Details regarding the deal have not been disclosed, but the press release characterizes this as a multimillion-dollar contract (see Lucent Sells Lambda Router in Japan).

Japan Telecom is the second announced customer for the LambdaRouter and the first in Asia. In January, the company announced Global Crossing Ltd. (NYSE: GX) was testing the LambdaRouter, and in May it announced that the provider would be its first official customer (see Lucent Lands LambdaRouter Deal). Last month, Lucent announced that France Telecom SA had begun testing the switch.

Wall Street didn’t seem too impressed with the announcement of the contract. Lucent’s stock closed at 6.30, down 0.24 (3.67%).

“It’s definitely a positive for Lucent to win some business with this product,” says Rick Schafer, an analyst with CIBC World Markets. “But I don’t I think it’s significant to the bottom line. In its current form its [Lambda Router] is only operating in limited applications.”

One reason the new contract hasn’t spurred too much excitement could be that the amount of the contract is likely to be quite small. Considering that each LambdaRouter costs approximately a million dollars, a multimillion-dollar contract may only amount to a few boxes.

Second, it isn’t clear how Japan Telecom will actually use the LambdaRouter. According to some reports, Global Crossing is only using it for protection switching. In other words, the optical switch is not sitting in the core of the network. Instead, it’s been deployed at the intersection of the undersea network and the terrestrial network, where it’s being used to switch wavelengths from an active fiber to a spare fiber when a connection is broken.

“The LambdaRouter is still in the science-experiment stage,” says Gina Sockolow, an equities analyst with Buckingham Research Associates (BRA).

Sockolow and other analysts have criticized the LambdaRouter for being too large and too expensive. In its current form, the optical signal loses its intensity as it bounces from mirror to mirror within its core, and amplifiers are needed to keep the signal strong. This not only adds complexity to the switch, but it also adds cost, say experts.

Corvis Corp. (Nasdaq: CORV) is the only other company shipping an all-optical switch for revenue. Six of its CorWave OS switches are deployed in the Broadwing Communications Inc. (NYSE: BRW) network. But unlike the LambdaRouter, which switches individual wavelengths, the CorWave is much less granular and switches multiple wavelengths at once. As a result, it is not as bulky or as expensive as the LambdaRouter.

Others are also working on all-optical switches. Nortel Networks Corp. (NYSE/Toronto: NT) says that its OPTera Connect PX, a product developed from its Xros acquisition, has completed a customer trial that it first began back in December of last year at an unnamed carrier site (see Nortel 's All-Optical Switch is in Trials). Tellium Inc. (Nasdaq: TELM) is also still working on its all-optical switch, the Aurora Full Spectrum Switch.

But it could be a while before a real market emerges for all-optical switches. CIBC's Schafer says he doesn’t expect to see significant volume until at least 2003.

— Marguerite Reardon, Senior Editor, Light Reading
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romulus 12/4/2012 | 7:45:00 PM
re: Lucent's LambdaRouter Turns Japanese To my knowledge Broadwing has deployed Corvis' Optical Switch and not the OCS (Optical Convergence Switch).
jimbo59 12/4/2012 | 7:44:44 PM
re: Lucent's LambdaRouter Turns Japanese ...comes the negative. Come on LR!

Lucent wins a multi-million dollar contract, but your astute reporting determines that is merely a 'few'switches. Got some insight to the actual contract?

LU's stock doesn't reflect the news, but in your mindset, that's because LU is simply ho-hum, and the stock price has NOTHING to do with ho-hum market conditions.

LU's OXC is 'expensive' while Corvis' OXC is not as expensive, and also doesn't have the granularity LU's does. So much for comparing apples and oranges!

The OXC market is not anticipated to take off until 2003, so LR ignores the fact that LU is the only company with a viable offering that is well situated to address that market.

Sheesh! NT used to get kudos for positioning themselves well, and LU merely gets a yawn!

So much for objective reporting!
ronjfon 12/4/2012 | 7:44:41 PM
re: Lucent's LambdaRouter Turns Japanese Believe that Lucent has Fast MIM in the Lamba router. Can anyone confirm this ?
optical_guy 12/4/2012 | 7:44:33 PM
re: Lucent's LambdaRouter Turns Japanese That's correct, they have the Corvis OS not the OCS.
let-there-be-light 12/4/2012 | 7:44:24 PM
re: Lucent's LambdaRouter Turns Japanese I agree with jimbo59. LR is not being objective. They turn around the best success story into a distateful and semi-scandalous story (but isn't that why we keep coming back to this site?)

OK, so it's no big secret that Lightreading doesn't like LUcy too much. Actually, Lightreading probably took LUbashing to a new level.

But, there's no smoke without fire, and who knows, maybe there was a time way back when, that Lightreading was tiny and insignificant and LU was riding high (no, that wasn't a nightmare / dream..) and LR got a good dose of LU's famous arrogance. Didn't you ever wonder why LU never advertises here??

We are all human and insults like that are hard to forget.

Nonetheless, I am waiting to see the day when LR can grow up, let bygones be bygones, and has something nice to say about the old lady. I should have a few years of life left yet...
hrdhtr 12/4/2012 | 7:44:23 PM
re: Lucent's LambdaRouter Turns Japanese You my friend are full of fertilizer.
Maybe you should start your own company, with your savy and know how you could get rich!!!
moguefett 12/4/2012 | 7:44:23 PM
re: Lucent's LambdaRouter Turns Japanese no offense folks,
This is a tragidy rather than a success story. Nothing is going to stop the inevidable demise of Lucent. They may be able to "buy" contracts with products that are FAR inferior to competitors, but who does that effect. The poor company their suckering into spending millions is that naive? Lucent is spending millions on trying to market products that are already considered legacy, despite their claims to "all optical" wich means "next gen"? Im trying to be short and get to the point, Im sorry if some of you dont understand what Im getting at. If their going to waste it , throw some this way and Ill invest it for them.
I dont have anything against LU nor anyone else.
Its just that times like these call for conservation and I believe that their just going to hurt themselves by insisting production in switching and transport market. R&D would be wise,
I dont think lucent themselves are confident with their product line and future despite what they may say. I mean , you should at least be educated about what the alternatives technologies are,the future demands of networking and make the logical comparisons and then you would probably see the significance of my statements. You would assume eventually someone would compute the results and at least try to do something about it rather than deny it :)Oh well, who am I and what the hell hell do I know about it anyway?
love and peace...

moguefett 12/4/2012 | 7:44:16 PM
re: Lucent's LambdaRouter Turns Japanese I suppose you think you have a clue? why dont you try posting it. Exactly. You dont. thats why your defending Lucent and telling me Im full of dung...need I say more?
Now selling my fertilzer on the other hand is not going to be easy. Quite a few major corporations already have the patent on it,uh um ,not to mention any names....
moguefett 12/4/2012 | 7:44:16 PM
re: Lucent's LambdaRouter Turns Japanese I suppose you think you have a clue? why dont you try posting it. Exactly. You dont. thats why your defending Lucent and telling me Im full of dung...need I say more?
Now selling my fertilzer on the other hand is not going to be easy. Quite a few major corporations already have the patent on it,uh um ,not to mention any names....
gladysnight 12/4/2012 | 7:44:14 PM
re: Lucent's LambdaRouter Turns Japanese Not exactly that you're full of shit, but that when you criticise anyone (not just LU) and then offer absolutely no alternatives, you do leave yourself open to the accusation.

for what its worth, i think that sitting at NT and carping at LU, or vice versa, or any other combination of two comms co's of your choice, is like standing on the decks of the Titanic laughing at the lifeboats and rescue boats also sinking.

I'd prefer the industry as a whole to be healthy, and given that it patently isn't, i feel no urge whatsoever to sneer at anyone elses misfortunes.

May The Random Factors Align In Your Favour.
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