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Optical/IP

Optillion Runs Aground

The long-anticipated consolidation in the transceiver space has claimed a victim in Swedish startup Optillion AB.

Company officials confirmed that Optillion filed for bankruptcy Friday, Feb. 11. The company has been placed in the hands of a liquidator, Roland Sundqvist, who has just begun the process of deciding the company’s fate.

Optillion's operations have stopped, and its 70 employees will be laid off.

The liquidation means Optillion will cease to exist as a company. Should the firm somehow manage to remain intact and restart operations, it would have to do so under a different name.

Other options include selling the firm as a whole, or selling off intellectual property in pieces, Sundqvist says. He notes that "a couple of companies" already have inquired about the availability of Optillion’s assets, although he wouldn’t give out any names.

Optillion developed 10-Gbit/s modules for 80km distances, selling transceivers conforming to the Xenpak multisource agreement (MSA) for pluggable optics. The company had also joined the MSA group for the smaller X2 specification (see Sweden Invades OFC and X2 MSA Ratifies 10-Gig Spec).

Xenpak and X2 specify a smaller alternative to the older 300-pin transponder standard used for 10-Gbit/s Ethernet and OC192 connections. However, the smaller size of pluggable optics presents a design challenge. That, combined with a continued weak market for long-haul components, has made the 80km Xenpak a relatively rare bird.

Big Bear Networks and Opnext Inc. have tackled the challenge, announcing 80km Xenpak parts. Finisar Corp. (Nasdaq: FNSR) is taking a swing at 80km, too, but has skipped ahead to the smaller XFP module, a next-generation successor to Xenpak and X2 (see Big Bear Hunts 10GigE Market, Opnext Intros 10-GigE Module, and Finisar Gets XFP Happy).

Had it survived, Optillion might have found its way there, too. "Our focus was on the longer reach, so the natural step would have been to go to the XFP [module]," says Patrik Evaldsson, Optillion's chief technology officer.

To see any of the transceiver startups bow out is not surprising, as the optical transceiver market has long been considered overcrowded.

"The business is very tough. There are too many players out there going for too small a market," Evaldsson says. Xenpak and its pluggable-MSA ilk make up what's expected to be a $100 million market in 2005, according to research firm Strategies Unlimited.

Optillion's third and final round of funding garnered $15 million in 2002, but back in 2000, Cisco Systems Inc. (Nasdaq: CSCO) and other investors ponied up an astounding $53 million Round B for the startup (see Optillion Banks $15M and Cisco Invests in Transceiver Startup). The size of Optillion’s Round A was not publicly disclosed.

— Craig Matsumoto, Senior Editor, Light Reading




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whyiswhy 12/5/2012 | 3:26:00 AM
re: Optillion Runs Aground "Any guesses as to who's next?

BKHM

Any guesses as to who's next?

AVNX

I'll bet there are others that happen sooner."

Of course, but not many of those are public, and of the (formerly massive) scale = train wrecks.

They call 'em train wrecks 'cause people on the sidelines can clearly see the end of the tracks. The real tradgedy is visibility onboard is poor, from the locomotive engineer to the conductor to the passengers.

If you are onboard, jump off now.

Why do you think the management bonuses are high at such times? These people have the most valuable options in such circumstances: other places that will hire them.

-Why
FunkyMunky 12/5/2012 | 3:26:01 AM
re: Optillion Runs Aground would someone want to try and build a business based upon a global market opportunity of $100M in an area as cut throat as optical components?

What %age of the market share would a company with its own fab and packaging plus 70 people have to have to become profitable?

The statement from Patrik Evaldsson said that they would have migrated into XFP at some point in the future which (as I understand it) is just as congested.

Its also interesting to know that Optillion seems to have spent $73M chasing this 'opportunity' - I wonder over what period of time the VC's were expecting to see payback on their investment?

FunkyMunky
lightdim 12/5/2012 | 3:26:03 AM
re: Optillion Runs Aground I think the list will include all operations who do not currently have a big bank account, or a rich and willing daddy.

JDSU will survive. Intel might as long as the headquarter is willing, as do Opnext, Agilent, Mitsubishi.
Sibylle 12/5/2012 | 3:26:04 AM
re: Optillion Runs Aground >my guess is the list of "who's next" is likely going to be littered with anyone that DOESN'T have a factory or fab in Southeast Asia.


Or a design center in India/China
Balet 12/5/2012 | 3:26:04 AM
re: Optillion Runs Aground Damn America!
I am packing my stuff and moving to SouthEast Asia!
OptixCal 12/5/2012 | 3:26:09 AM
re: Optillion Runs Aground my guess is the list of "who's next" is likely going to be littered with anyone that DOESN'T have a factory or fab in Southeast Asia.
lastmile 12/5/2012 | 3:26:14 AM
re: Optillion Runs Aground Any guesses as to who's next?

BKHM

Any guesses as to who's next?

AVNX
Stevery 12/5/2012 | 3:26:14 AM
re: Optillion Runs Aground Any guesses as to who's next?

BKHM

Any guesses as to who's next?

AVNX


I'll bet there are others that happen sooner.
Stevery 12/5/2012 | 3:26:16 AM
re: Optillion Runs Aground I never did get why the $53M investment happened. Even in the middle the bubble it was odd.

Any guesses as to who's next?
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