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OpNet's Filling Its Dance Card

Light Reading
News Analysis
Light Reading
3/23/2001

A flurry of activity at OpNet Technologies Inc. (Nasdaq: OPNT) this month has highlighted the role of design tools in optical networking.

Since March 1, OpNet's signed OEM and development contracts with optical switch vendor Ilotron Ltd. (see Ilotron Incorporates OpNet App); test equipment vendor GN Nettest (see OpNet, GN Nettest to Collaborate); carrier software supplier Telcordia Technologies Inc.; and Comsof Communication Software, a privately held design firm in Ghent, Belgium (see OpNet Teams With Belgian Vendor).

The company also shelled out $5 million to purchase a network-simulation software suite called Netmaker from Make Systems Inc. The deal was announced yesterday at the OFC conference in Anaheim, Calif. (see OpNet Acquires Software Firm). The acquired software will augment its product line, OpNet says.

OpNet makes software that uses simulation and analytical modeling to graphically predict and demonstrate how various types of broadband networks perform under a given range of conditions. For instance, the software can predict the overall impact of improved bandwidth, the use of different types of broadband networking, or different kinds of products.

OpNet's APIs (application programming interfaces) allow third parties to customize the software, paying licensing fees to OpNet. The result is a handy sales tool, both for equipment suppliers and for carriers seeking to add another service-for-hire to their roster.

"It's much easier for us to sell products if we can demonstrate their usefulness," says Bruno Cotta, manager of strategic business solutions at Ilotron. "The operator gives us their scenario and expectations, and we use OpNet to quantify the value of what we're offering to make that happen."

Cotta says Ilotron will use the OpNet programs not only to devise presales presentations, but to offer post-sales services, such as capacity planning and assessment.

Other vendors who've OEM'd OpNet's software include Cisco Systems Inc. (Nasdaq: CSCO), Lucent Technologies Inc. (NYSE: LU), Marconi Communications PLC (Nasdaq/London: MONI), Nortel Networks Corp. (NYSE/Toronto: NT), Tellium Inc., and Terawave Communications. Using network assessment and planning software to sell new services and to add an additional source of follow-on service revenue appeals to carriers, too. AT&T Corp. (NYSE: T), France Telecom SA, and NTT Corp. have bought OpNet's product.

All this is boosting OpNet's bottom line. Even though the company remains small (its market cap was just $193.6 million at press time), last quarter's revenues from software licensing grew 83 percent year-to-year. Earnings per share for the quarter ended December 31, 2000, were 6 cents per share on revenues of $8.7 million, a 50 percent increase over the preceding quarter's EPS.

But OpNet's competition is moving in to tap the same broadband segment. Network Design Tools, a brand-new startup spun out of Telcordia Technologies Inc. (see Telcordia Spins Out Design Shop), was founded this week. Also in the business are Artis Software and Virtual Photonics Inc. (VPI).

Of these, VPI seems the toughest competitor, because it offers not only predictive analysis for existing networks but software that designs components, products, and networks from scratch -- something OpNet doesn't do. VPI's been aggressively amassing a sizeable stronghold of tools (see Startup Targets Design Tool Dominance) and has partnerships with a range of vendors, including Siemens AG (Frankfurt: SIE) and Telcordia.

-- Mary Jander, senior editor, Light Reading http://www.lightreading.com

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