Mahi Swims Into the Metro Core

ATLANTA -- OFC 2003 -- After five years of development, Mahi Networks Inc. is introducing its first product, the Mi7 Optical Transport Switch. The company will be displaying the product here this week at the OFC Conference.

Combining optical switching and transport functions along with metro Ethernet and Sonet add/drop multiplexer (ADM) capabilities, the box carriers 320 Gbit/s of capacity and has been designed to consolidate several pieces of equipment that carry out those functions in telecom central offices today. Mahi officials say it will aggregate, groom, and switch access traffic from ADMs sitting on metro rings, as well as provide broadband crossconnect and Ethernet capabilities.

Today, carriers use a variety of Sonet ADMs -- primarily from market leaders such as Cisco Systems Inc. (Nasdaq: CSCO), Fujitsu Network Communications Inc. (FNC), Lucent Technologies Inc. (NYSE: LU), and Nortel Networks Corp. (NYSE/Toronto: NT) -- to aggregate and groom traffic. They also use broadband digital crossconnects from companies like Alcatel SA (NYSE: ALA; Paris: CGEP:PA) and Tellabs Inc. (Nasdaq: TLAB; Frankfurt: BTLA) to switch the traffic.

Along with reducing the number of boxes interconnecting the central office, one of the Mi7’s first target applications is automating the provisioning of new circuits. Today, carriers must physically cut new fiber and manually plug it into the appropriate port in order to provision a new circuit. Mahi CEO Chris Rust claims the Mi7 can save carriers up to 50 percent on capital costs, while also saving them a considerable amount on the operational side.

The Mi7 will also employ standards and interoperability to battle the incumbents. The box works with multiple vendors, according to Rust. Mahi is actually demonstrating interoperability with gear from Cisco, Lucent, Fujitsu Ltd. (KLS: FUJI.KL), Turin Networks Inc., and White Rock Networks at OFC this week. It is also a strong supporter of standards such as GMPLS (General Multiprotocol Label Switching).

Mahi has an OEM agreement with White Rock and uses the technology to provide a low-cost, highly dense DS3 extension to the Mi7. This extension, called the Dx7, provides DS3 electrical connections to legacy access networks.

The company has already completed the rigorous and expensive Telcordia Technologies Inc. Osmine certification process, a requirement for almost any equipment supplier addressing the regional Bell operating companies (RBOCs).

Mahi officials say the company has 10 boxes deployed in trials with two RBOCs and three interexchange carriers. And, although he wouldn’t name names, he says the company is close to signing a deal with one of these customers, which has already certified the box for use in its network.

While Mahi seems to be making progress, the road for startup equipment suppliers is not easy. The company must battle competition from companies with much more cash and existing relationships with many of these carriers.

“They are addressing the bread and butter of incumbent equipment providers in the interoffice transport and switching market,” says Michael Kennedy, managing partner at Network Strategy Partners LLC. “From an architectural and engineering standpoint the product looks very good. But they are taking on the big boys on their own turf, and that’s no easy task.”

There is no doubt that such a metro-core switching product is at the top of the list for many larger vendors. Cisco, for example, has recently introduced the ONS 15600, a product similar to the Mi7 (see Cisco Launches Metro Switch). Lucent’s Lambda Unite also competes in this market, as does the Tellabs 6500. And Ciena Corp. (Nasdaq: CIEN) has been trying to make progress in the space as well.

The Mi7 is also making a bet on Ethernet, enabling carriers to take in multiple Ethernet connections and map them onto a single circuit. This differs from other vendors that map Ethernet on a one-to-one basis.

“Their success will be tied to the success of metro Ethernet,” says Kennedy. “A lot of the existing gear treats Ethernet very inefficiently. Mahi is more comprehensive in its approach.”

Ten months ago, Rust left his job as a partner at Sequoia Capital, one of Mahi’s original investors, to become CEO of Mahi. He says he wasn’t sure if the company would even survive. On May 15, 2002, Mahi was actually on the verge of running out of money.

“I had to stand up and tell the staff that I didn’t know when or if I was going to pay them,” he says.

But after a $75 million eleventh-hour save by a syndicate of investors including St. Paul Venture Capital and Jerusalem Venture Partners, Mahi survived and continued to put the final touches on the Mi7 (see Mahi Gets a Fresh $75M). Now the box is in a series of field trials, and Rust expects revenues to start coming in this quarter.

Rust says he had the vision for the Mi7 back in the late 1990s while he was working as a consultant for U.S. West.

“Since the first napkin drawings of the product, we have always intended to go after the embedded base of equipment,” he says.

— Marguerite Reardon, Senior Editor, Light Reading

For up-to-date information about the coming OFC Conference, please visit Light Reading’s Unauthorized OFC Preview Site.

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Marguerite Reardon 12/5/2012 | 12:22:58 AM
re: Mahi Swims Into the Metro Core Yes, you are right. I have changed it.
God 12/5/2012 | 12:22:58 AM
re: Mahi Swims Into the Metro Core ... and not Lambda Router. The latter has been discontinued and was not a metro grooming switch anyway.
intrigued 12/5/2012 | 12:22:57 AM
re: Mahi Swims Into the Metro Core >>Yes, you are right. I have changed it.

Marguerite, you should really give thanks to God.
canadian 12/5/2012 | 12:22:55 AM
re: Mahi Swims Into the Metro Core I'm trying to understand what this product really is. Is this a Sonet ADM providing Ethernet services over a Sonet ring infrastructure? If so, this probably switches

Or is this a router/switch with p2p PoS interfaces which can do GMPLS signaling over a topology free infrastructure.

How do they provide Ethernet services - using L2VPNs?

Just trying to get past the marketing speak and enhance my understanding.

Thanks in advance!
wilecoyote 12/5/2012 | 12:22:52 AM
re: Mahi Swims Into the Metro Core If:

1) They sign a public vendor to do implementation and support, not to mention work with the very complex procurement webs in the RBOCs buying heirarchy (oft overlooked group of folks who actually buy stuff at the end of the day).
2) Can show financials beyond the last round.
3) Deliver a box that actually in turn delivers as advertised, radical OPEX reduction.

I like Mahi's chances. Always have. Good group of people overall, IMHO.

Go get 'em!

No, I don't have Mahi shares.

Cygnus X-1 12/5/2012 | 12:22:51 AM
re: Mahi Swims Into the Metro Core Look like Mahi is cleaning Polaris clock in marketplace.
ThouShaltNotJudge 12/5/2012 | 12:22:49 AM
re: Mahi Swims Into the Metro Core With recent layoffs, Polaris has stated that they have shifted into cash conservation mode. This probably means that they can't afford even the cheap seats at OFC. I suspect they also didn't want to raise eyebrows with another trade show appearance uncontaminated by a first customer win.

Though I noticed that they can apparently afford to keep sending their GMPLS evangelist around the country, but to what end who knows?
lr_monger 12/5/2012 | 12:22:42 AM
re: Mahi Swims Into the Metro Core God boxes are low quality products.

The strategy is:

"it does everyting"

The reality is:

"it does nothing well (and costs too much)"
lr_monger 12/5/2012 | 12:22:42 AM
re: Mahi Swims Into the Metro Core While the Titanic was sinking the band continued to play. History repeats itself -- Mahi Kool-Aid for everyone while the ship is sinking.

Would you purchase a TV, 8 track, FM stereo, cassette player, DVD player, VCR, satellite receiver and CD player if they were all consolidated into one system -AND- pay a premium price from an unknown manufacturer ?

When you do see such consolidated products they are usually CHEAP and of low quality. This is the Mahi strategy. Dig it.

lr_monger 12/5/2012 | 12:22:42 AM
re: Mahi Swims Into the Metro Core The Engineering folks at Mahi are also trying to figure out what this product really is. The management folks are trying to figure out how to achieve an exit -- any exit...

The line cards cost more to make than they can sell them for, and are of extremely high cost when compared to various other products. They face pressure on price and the end result is a less than zero sum game.

The leadership is clueless and has no prior experience.

Lastly, the shares are washed out, noboby has a chance to gain anything at all at Mahi.

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