Sources close to Pluris say two recent layoffs have reduced the employee census from about 235 to 175 over the past three months. The company also remains headless: Despite a recent round of $53 million in funding (see Washout Rains $53M on Pluris), Pluris has not replaced its former CEO Joe Kennedy, who left in March (see Pluris CEO Bolts). Kennedy himself says he tried to hang on until the firm got a replacement for him but found the wait was getting too long.
Pluris sources confirm there have been layoffs. And without talking numbers, they concede the above figures are in the ballpark. They also say they'll continue to take their time about finding a CEO.
"We'll try to find the right person, rather than simply filling the slot in a hurry. We don't need to do that," says Gary Law, VP of marketing.
Pluris isn’t alone in its present woes. Investors have poured over $800 million into core router startups over the past several years, with no return in terms of revenues. And as the telecom downturn has pinched carrier funds to new minimums, hopes for imminent sales are dwindling (see Report: Core Router Market Falls 22% and Rotten at the Core? ).
Indeed, not one of the major startups has been able to produce a single carrier contract, despite the fact that each has been in business for at least three years.
Table 1: Core Router Startups: An Aging Population
|Funding to date||Number of rounds||Founded||Latest stories in Light Reading|
|Caspian Networks||$262 million||4||February 1999||Caspian Names CEO/Prez/Chairman, Caspian Starts Fresh With $120M|
|Charlotte�s Web Networks Ltd.||N/A||N/A||1998||Charlotte's Web: Who's Best Now?|
|Chiaro Networks||$210 million||4||March 1997||Chiaro Lands an $80 Million Round|
|Hyperchip Inc.||$136 million||4||1997||Hyperchip Lands $43M in Financing|
|Pluris Inc.||$215 million||5||July 1997||Pluris CEO Bolts , Washout Rains $53M on Pluris|
All of the companies listed above say they're engaged in customer trials. Pluris, for instance, has stated in the past that it’s in labs at Deutsche Telekom AG (NYSE: DT), Level 3 Communications Inc. (Nasdaq: LVLT), and Qwest Communications International Inc. (NYSE: Q). But those carriers have their own problems, and it doesn’t look as if they’re making big core router commitments right now.
In the future, things may get even tighter. Incumbent suppliers Cisco Systems Inc. (Nasdaq: CSCO) and Juniper Networks Inc. (Nasdaq: JNPR) have no intention of ceding any market space to upstarts. Juniper just released its long-awaited high-density core router, and Cisco's issued an upgrade of its own (see Juniper Goes Terabit With the T640 and Cisco's Got a Terabit Router Too). The market leaders plan to build on past successes, especially as the ongoing kibosh on spending makes carriers balk at investing in startups.
It’s a tough spot to be in. Even Joe Kennedy, Pluris’s former CEO, says the company will be challenged to stake its claim. He says only about half of today’s privately held core router startups will make it -- and he’s not sure which ones.
Technically, things look good for his old company, he insists. “Pluris is a year ahead of Caspian, which is a year ahead of Hyperchip,” he theorizes. Another startup, Procket Networks Inc., could also be in the running, he says, but apparent shifts in strategy from core to edge have made it a wild card (see Bigwigs out of Procket? ).
Would Pluris and its rivals do well to consider revamping their strategies, too? Not really, sources say. “The edge is arguably just as crowded,” says David Passmore, research director at Burton Group, who also thinks it's time for a shakeout.
Passmore says the issue isn't technical. "Technically, these companies are doing really cool stuff, but technology doesn't do much for you these days," he says. It's a matter of incoming revenues. Even new funding won't help some of the startups, he reckons. "You do the math, see what they're getting and what their burn rates are." Fundamentally, nothing will change until carriers see fit to make some choices.
In the meantime, the core router startups are between a rock and hard place. “All they can do is pray things turn around,” Passmore says.
— Mary Jander, Senior Editor, Light Reading