Lumentis Faces Metro Challenge
The company reckons that its equipment can deliver a two to four fold improvement in price/performance compared to current metro DWDM equipment from the likes of ONI Systems Inc. (Nasdaq: ONIS), ADVA AG Optical Networking (Frankfurt: ADV) and Cisco Systems Inc. (Nasdaq: CSCO).
The main basis of Lumentis’s claim is that it’s latched on to a new way of reducing losses in access rings. The upshot is that carriers can build bigger rings, without needing amplification, and each ring can serve a greater number of customer sites. With bigger access rings, carriers also need less hubs to link them together, so their core networks can be smaller and less expensive.
"We've blown a hole in the core," says Anders Lundberg, Lumentis's CEO.
That’s the theory, at any rate. Of course, existing players don't quite see it that way. Additionally, they point out that Lumentis is entering a tough market for a little startup.
Still, let’s start with some product details. Lumentis’s equipment supports up to 80 wavelengths per fiber and can be used with or without amplifiers. There are two boxes – a small one, called the Mentis 300, that sits on an access ring and can drop and add two wavelengths, and a hub, called the Mentis 3000, that sits in a rack and links access rings to the metro core.
The Mentis 3000 also incorporates an all-optical switch - a subsystem from OMM Inc. - that enables carriers to provision continuous wavelengths from one Mentis 300 to another, even if they’re on different access rings.
Lumentis has developed management software that automates provisioning of these wavelengths, although the provisioning process requires manual installation of the appropriate filters in the Mentis 300 boxes at either end of the connection.
In the past, Lumentis has said that it would use tunable lasers and receivers to eliminate this requirement (see Metro DWDM: Another Leap Forward?). It now claims this was never seriously considered. "We were putting up a big smoke screen," says Lundberg.
Lumentis has a number of cards that slot in either of its boxes. These include controller boards and three different transponder cards for connecting equipment such as multiplexers, switches and routers. The first enables carriers to set different data rates from 100 Mbit/s up to 2.5 Gbit/s, the second provides two gigabit Ethernet connections and the third, called a "muxponder" enables carriers to aggregate multiple Sonet or SDH (synchronous digital heirachy) channels onto single wavelength.
Pär Johanson, director of marketing and sales at Lumentis, notes that the use of an all-optical switch means that carriers will be able to make use of future cards, for instance supporting 10 Gbit/s connections, without having to upgrade their Mentis 3000 hubs. It also means that carriers will be able to deploy 10 Gbit/s selectively. They won’t be forced to shift everything over to a higher transmission speed in order to cater to a few customers wanting 10 Gbit/s.
It’s worth noting that Adva has mothballed a similar plan to incorporate an OMM all-optical switching module in its metro DWDM equipment, after announcing it only a couple of months ago (see ADVA Adds All-Optical Switching). "We’re not going to make it into a product today," says Lars Friedrich, Adva’s product line manager. "We don’t see the infrastructure in the carrier side in which such an application makes sense."
As already noted, Lumentis’s main claim to fame is that its add-drop boxes have significantly lower losses than competing products. Because of this, it can support as many as 13 of them on a 65-km access ring with no amplifiers, according to Johanson. This compares with a maximum of about seven when using competing products - a figure acknowledged by Adva’s Friedrich and a source at Cisco, who requested anonymity. Vince Maltese, ONI’s regional director for Europe, says it’s tough to make such comparisons without knowing other parameters such as the fiber type.
Adva’s Friedrich argues that eliminating amplifiers doesn’t result in much of a cost saving, because they represent less than 10 percent of the overall cost of a typical metro DWDM network.
Of course, this doesn’t take into account the savings that might result from being able to double the number of add-drop muxes on access rings and thus halve the number of hubs.
However, Friedrich points to a couple of catches. One is that network reliability can suffer, because each hub is handling double the number of connections. The other is that a ring and hub design aren’t the most efficient for handling some types of connections. A mesh design is sometimes more appropriate.
The Cisco source adds that geography often constrains the size of access rings in any case. If a business district can be circled with a 30-km un-amplified access ring, having one that can reach double the distance isn’t much of an advantage.
Friedrich, however, thinks there’s a big market for long reach metro DWDM networks in Europe. Metro DWDM has an edge over conventional SDH equipment at higher bandwidths, he says, and larger networks typically handle higher bandwiths.
In Friedrich’s view, the key to reducing metro DWDM costs is in the filters used to separate wavelengths, which often represent 30 percent of overall costs. He notes that the 80 wavelengths (all in the C band) cited by Lumentis, implies a 50 GHz spacing. This means that Lumentis is pushing the limits on thin-film filter technology and may have to use more expensive arrayed waveguide gratings (AWGs) instead, according to Friedrich.
Lundberg says that Lumentis has managed to get some 'state-of-the-art" components because it has started development work much later than existing players. These just might be AWGs, which look as though they’ll drop in price significantly in the coming year.
Lumentis also makes a big thing out of the density of its equipment which has been designed to fit into 300-millimeter deep racks used in Europe in such a way that the boxes can be installed back to back, with all of the connections coming out of the fronts. This enables it to cram all of the equipment to support 55 wavelengths, together with its optical switch, into a single bay of a 7-ft high rack, according to Johanson.
Competitors say this is good, but not outstanding. Cisco’s equivalent box, the 15252, acquired from another Swedish metro DWDM startup, Qeyton, handles 48 wavelengths per bay. According to Friedrich, Adva’s FSP 3000 handles 32 wavelengths and its FSP 2000 handles 64 wavelengths. Maltese says ONI’s gear can support 33 protected wavelengths and 66 unprotected wavelengths per bay.
One thing’s for sure: Lumentis will need a really compelling economic case for it to succeed in the current market climate, now that nearly all of the potential customers are incumbent carriers. ONI's Maltese says their attitude has changed a lot in the past year. They're no longer keen to try out new technology. They're more interested in working with suppliers that understand their problems - and that implies working with experienced suppliers, not startups.
Questions also have to be raised over whether Lumentis will run out of money before it manages to make its mark. The chances of following in Qeyton’s footsteps and getting acquired seem very remote at the moment. Even suggesting such a thing "is like swearing in church,” says Maltese.
Lumentis has some answers to these issues. For a kickoff, it’s being financed by DB Industrial Holding AG, a division of Deutsche Bank AG (see Swedish Startup Completes 1st Round). The bank has a multi-year plan to develop the company which includes giving it regular amounts of cash. "We’re not running with a venture capital partner, we're planning an industrial venture. It’s not a quick in and out," says Lundberg. "With Deutsche Bank, we don’t see a problem with cash flow."
The plan also envisions Lumentis forming a partnership with a heavyweight vendor, and according to Lundberg, he’s already received "flattering" approaches from some "big players". All the same, there aren’t many big players that don’t already have their own metro DWDM products, albeit older products than those from Lumentis. The exceptions might include Lucent Technologies Inc. (NYSE: LU) or possibly Siemens AG (NYSE: SI; Frankfurt: SIE). Siemens only recently signed a deal with Adva (see ADVA, Siemens Team Up) to sell its gear, but Adva had a similar deal with Alcatel SA (NYSE: ALA; Paris: CGEP:PA) at one stage, and that’s now coming to an end. Nothing, it seems, is forever in optical networking.
— Peter Heywood, Founding Editor, Light Reading