Luminous Cuts Away
Luminous Networks Inc., a startup building metro Ethernet equipment, laid off a little over 20 percent of its workforce earlier this month, according to sources close to the company.
The company confirmed the layoffs but would not divulge numbers. Sources say it's somewhere around 50 employees. This is the second layoff for Luminous in the past six months. The company had another small layoff in December. Currently, there are about 175 people working at the company, says John Hamburger, director of marketing communications.
“We’re fully funded," says Hamburger. "We have a product shipping for revenue. But we had to hedge against the continued market softness, which meant that we had to make some headcount reductions.”
To date, Luminous has raised $148 million in venture funding, $80 million of which it received last June (see Luminous Rounds Up $80M). Hamburger says this should be enough to take it through its next “financial event." And it is shipping products to China Netcom Corp. Ltd. (see Chinese Get Luminous). But Luminous may still have a tough road ahead of it.
The company’s whole value proposition is based upon the adoption of a technology called resilient packet ring (RPR). This technology, which is currently working its way through the Institute of Electrical and Electronics Engineers Inc. (IEEE) standards process, is designed to provide Sonet-like features and protection to Ethernet-based rings (see RPR in the Spotlight). With standardization still at least a year away, some argue that RPR is unnecessary for building out new Ethernet metro networks (see MPLS Spurs Metro Ethernet Debate). Companies like Atrica Inc. say that their devices can offer the same sort of Sonet-like protection in a traditional Ethernet mesh architecture.
Even if RPR takes off, there is still the big question of whether or not RPR should simply be a feature on an existing switch or router or if it requires a standalone box. Luminous seems to take the dedicated box approach, while a number of vendors see it as a feature.
At least four edge routing companies, including Cisco Systems Inc. (Nasdaq: CSCO), Crescent Networks Inc., Redback Networks Inc. (Nasdaq: RBAK), and Riverstone Networks Inc. (Nasdaq: RSTN), have already included RPR-like technology in their platforms (see Taking Routing to the Edge). Cisco reports that it has sold over 10,000 ports of Dynamic Protocol Transport (DPT), its proprietary version of an RPR-like technology.
But Luminous argues that its product is already getting traction in the market. It has announced a contract with China Telecom and claims that it has other international accounts that haven’t been announced yet. Regardless, opponents point out that Luminous still lacks the validation of a large U.S. carrier. Rumors had circulated over a year ago that Qwest Communications International Inc. (NYSE: Q) was looking to test the gear (see Luminous Close to Qwest Deal). But hopes of a Qwest contract have faded as the carrier continues to clamp down on its spending, especially with startups (see Is Qwest Shunning Startups?).
— Marguerite Reardon, Senior Editor, Light Reading