WaveSmith Targets Cascade Switch

WaveSmith Networks (NYSE: AMD) has an interesting plan: Hit Lucent Technologies Inc. (NYSE: LU) when it's down.

The approach: Give carriers an alternative to Lucent's carrier ATM (asynchronous transfer mode) switching products by building a competitive product that offers higher density, IP features, and open management interfaces. The primary target is the CBX 500, the carrier switching product that Lucent acquired in its purchase of Ascend/Cascade, which has been the leader in the product category.

"Carriers won't have to change the way they build networks," says Bob Dalias, WaveSmith's President, CEO, and founder, of his plans to offer an alternative to the Lucent products. "It gives us an opportunity to be a second source.

It's a similar strategic approach to the one that Juniper Networks Inc. (Nasdaq: JNPR) used to go after Cisco Systems Inc. (Nasdaq: CSCO). Juniper got its foot in the door by boosting performance of Internet core routers while at the same time offering a compatible product that could be used as a second source. The only question is whether WaveSmith's team has the wherewithal to execute in similar fashion.

Tim Kraskey, managing director at YankeeTek Ventures and a former VP of marketing at Ascend and Cascade, says it's not as easy as it sounds.

"I think they've got their work cut out for them," says Kraskey. "As a management team, executing in a tough marketplace is not going to be easy."

Indeed, WaveSmith's got competition. Of primary concern is Équipe Communications Corp., a company staffed by many of the employees from the CBX 500 team at Lucent (see Équipe Scores Another $51 Million ). And Lucent is working on a successor to the CBX 500, though many of the players involved in the orginal development of the switching platform have left the company, including those that went to Équipe.

WaveSmith says it differs from Équipe in that it's targeting a product for the network edge, rather than the core of telecommunications networks. But that may be splitting hairs. Such positioning puts WaveSmith in an awkward position between a large core switch such as Équipe's and the multitude of access and edge players.

Marketing Position There are other warning flags: WaveSmith has raised $23.5 million in venture capital so far, but that's not a huge amount for an equipment company in a funding environment that's getting tighter.

WaveSmith's products, grouped as a "WaveForm Architecture," will handle TDM (time-division multiplexing), ATM, frame relay, and IP traffic over a protocol-agnostic, packet-based switching fabric, according to WaveSmith officials. The switch will scale to 7.6 Gbit/s per one inch of rack space, and its management system is designed to accomodate standards such as CORBA, SIP, and MPLS, according to WaveSmith's management team.

Despite the challenges, analysts say the market opportunity is large.

"It's an installed base that's huge," says Scott Clavenna, of PointEast Research LLC and Light Reading's director of research, who estimates there must be tens of thousands of Cascade switches installed in telecommunications carrier networks. "Once you bought a Cascade switch, you got locked into the whole product line. It's in almost every central office in the country. The RBOCs are definitely ready for the next generation of product."

Indeed, Lucent is vulnerable in the product category (see Lucent Losing Grip on ATM Core?). The company is also undergoing a major financial and management crisis after announcing several earnings shortfalls and the resignation of former CEO Richard McGinn (see Lucent Starts Cleaning Up).

WaveSmith plans to ship a beta product in the summer and make the product fully available by the end of the year.

-- R. Scott Raynovich, executive editor, Light Reading http://www.lightreading.com
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Harley 12/4/2012 | 8:39:54 PM
re: WaveSmith Targets Cascade Switch lu-alum,

It's shipping - marginally. They have some takers, but nothing big to crow about.

I was incredibly disappointed they didn't show up for LR's test. I know a lot of work was performed by those that stuck with the project to migrate it from a "bill of goods - frame relay box" to a multi-service offering.

The Agilent/Lucent test substantiated LU's claims, but they haven't realized any significant revenue from it yet.

[email protected] 12/4/2012 | 8:40:14 PM
re: WaveSmith Targets Cascade Switch I read a great article about Wavesmith on Teleconomist.com. It answers some of your questions.
lu-alum 12/4/2012 | 8:42:24 PM
re: WaveSmith Targets Cascade Switch How many of the nexabit crew is left hear they all went to axiowave. Is the nexabit box shipping?
lu-alum 12/4/2012 | 8:44:55 PM
re: WaveSmith Targets Cascade Switch Bloodbath out there baby, Bloodbath! I'd hate to be raising a round of funding right now.

Bet those guys are glad they're not YAMOC (Yet another Metro Optical Company). At least theyre after a piece of existing business.

I heard WaveSmith is using technology reverse engineered from a UFO that crashed in Lunenberg. Shhhh

Amen to WU-FU, you gotta test!
thetruth 12/4/2012 | 8:49:11 PM
re: WaveSmith Targets Cascade Switch I think it is great what WS is trying to do, but simply a new architecture will not make it in a somewhat mature market. I hope that they can offer the specialties that these carriers need, like full SLA monitoring, CNM, full billing packages etc etc. It is not just speeds and feeds that these carriers are selling but a complete service. I hope that they have some industry people that understand this and do not simply produce a switch with higher speeds and better density. That does nothing for me if I can't bill my customers etc. Fast speeds with no billing = nothing in my pocket. We have to wonder if they can pull off what took Cascade over 4 years to produce in less than a year. But at the same point Smith milked that industry, gave a non-scalable product and ran like hell. I suspect he will pull another fast one at Sycamore...just get it out...sell a bunch..then bailout
Wu-FU 12/4/2012 | 8:50:09 PM
re: WaveSmith Targets Cascade Switch test
Ishmeal 12/4/2012 | 8:50:10 PM
re: WaveSmith Targets Cascade Switch Good point, it isn't 1999 anymore, you can't just announce a product and sell the company anymore. Gotta stick it out generate some $$.

Big question in my mind is will an RBOC buy from such a small company?
Ishmeal 12/4/2012 | 8:50:11 PM
re: WaveSmith Targets Cascade Switch Good code base? The code base is from 1991. It's spaghetti at this point! That's why there are so many outages. If products and revenue are the key then LU is in deep trouble because they seem to have neither.
yomama 12/4/2012 | 8:50:11 PM
re: WaveSmith Targets Cascade Switch I hear ya..I'm just stating facts, Cascade engineers are all over the place. I for one think that there are too many startups and 75% of them will eventually end up like Ironbridge...there are just too many..I dont care how big the internet is or will be...too many co's going after the same market...just my two cents.....
atmforever 12/4/2012 | 8:50:15 PM
re: WaveSmith Targets Cascade Switch There may not be many Cascade Engineers left at Lucent. But they have excellent new talent, good code base, existing architectures, and most importantly a great product in the making. Having a few former Cascaders does not make these startup great companies. Its all about products and revenue.
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