Startup Targets Design Tool Dominance
In order to achieve its rapid ramp-up, VPI has gone on an acquisition binge that would do credit to a much larger organization.
The company started life as a spinoff from Germany’s Heinrich Hertz Institute, called BNeD (for Broadband Network Design). Then it merged with another group of experts from the Australian Photonics Co-operative Research Centre to form VPI at the end of 1998.
Since then, VPI has formed alliances with TRLabs in Canada and Telstra Corp., Australia's incumbent carrier. After that, in April 2000, it struck a deal with Siemens’s ICN division to acquire its network projects section. Then it snapped up a tiddler, Belcalf, a little software company in Minsk, Belarus.
The acquisition route was the only way to grow quickly, according to VPI’s CEO, Kay Iverson. “Our problem is that we simply cannot find enough IT people around the globe,” he says.
VPI is currently pursuing six acquisitions in parallel, according to Iverson. “Our lawyers are very happy," he adds. “We have times where the lawyers are costing more money than we are getting in revenue.”
When all the deals are done -- slated for sometime next year -- Iverson says the company plans to stage an IPO. And he expects to start making a profit in the quarter following the IPO.
On the face of it, VPI’s product portfolio looks impressive. It includes a bunch of packages for designing optical components, transmission systems, and transport networks, which incorporate simulation software. Another bunch of packages -- the ones from Siemens -- optimize the performance of services running over different types of broadband infrastructure.
Some of these tools condense design times from days into minutes, according to VPI. Last year, the startup showed that its latest product, the Photonics Design Transmission Suite, could be used to design a complex, dispersion managed, 16-channel DWDM system with a total transmission length of 10,000 kilometers in less than 20 minutes.
Pretty much everyone -- from the major carriers to component startups -- wants to use these sorts of tools to streamline their design cycles and reduce the time to market. And VPI already has an impressive list of customers (see http://www.virtualphotonics.com/company/clients.php3).
All the same, it’s hard to believe that VPI has had enough time to integrate the tools it's acquired. Its sales literature says that the output from one package can be used as the input for another, but that may not go far enough for some users.
“The key is seamless integration, so that you can move between functional layers,” says Colin Mick, president of The Mick Group, a consultancy, and a founder of MLDesign GmbH (no Web site), a startup developing design tools in this field. “Actually, what you want to be able to do is work at different levels simultaneously,” he adds.
Achieving that level of integration might take VPI considerably longer than acquiring all of the tools in the first place.
-- Pauline Rigby, special to LightReading