Why JDSU Bought Scion

For a company that claimed to have no sales and marketing staff whatsoever, startup Scion Photonics, which was bought by JDS Uniphase Corp. (Nasdaq: JDSU; Toronto: JDU) in April, seems to have done a pretty good job of getting its product accepted by customers.

According to a nice, shiny marketing presentation that fell into Light Reading's hands recently, Scion managed to get its products tested and approved by ten major OEMs in the industry.

Listed were: All of the above OEMs are described as having sampled Scion's Arrayed Waveguide Gratings (AWGs) or integrated AWG-based components. And all but two have also approved what they found, according to the presentation. A decision is still awaited from Nortel and Lucent.

"Sampled and approved" means that "customers have tested our parts to our/their specs (performance, form factor, and reliability) and given us the stamp of approval," according to a Scion employee who probably doesn't want to be identified. It is not stated whether this has resulted in design wins, although the presentation does boast of repeat orders.

One startup featured on the list: Lynx Photonic Networks, which has approved Scion's process for manufacturing its thermo-optic switches (see Lynx Claims Optical Switch Advance).

Furthermore, the presentation includes statistical results that show the AWGs meet and exceed Telcordia Technologies Inc. GR-1221 CORE -- the standard for passive components.

All this goes a long way toward explaining why a company that lost $4.3 billion last quarter is still out there shopping for startups (see JDSU Posts Loss, Buys Startup).

The list, which predates the acquisition, is outdated, of course. Most likely it has grown and progressed as a result of Scion becoming a part of JDS Uniphase, thus being able to leverage the larger company's sales channel and established customer accounts.

There are a couple of other interesting points worth noting. One, OEMs are very interested in planar waveguide-based components; and two, JDS Uniphase has a chance of being a key supplier, taking on Lightwave Microsystems Corp., Hitachi Cable Ltd., and NTT Electronics Corp. (NEL)

The presentation, which was probably used to woo JDS, also notes that JDS Uniphase's future strategy should involve closing its thin-film filter product line to make more room for the AWGs -- the exact opposite of what Agere Systems (NYSE: AGR) has done (see Agere Favors Thin-Film Filters). To make this happen, Scion plans to price its products at under $100 per channel, which will allow it to compete on price with eight-channel TFF wavelength multiplexers (see Scion Seeks to Slice Components Costs).

— Pauline Rigby, Senior Editor, Light Reading
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ZZbottom 12/4/2012 | 10:10:22 PM
re: Why JDSU Bought Scion No sales and marketing staff? From what I heard they had SOME prior to the acquisition. Anyone knows better?

I am surprized the company did such a poor job at protecting their list of potential customers...
BobbyMax 12/4/2012 | 10:10:21 PM
re: Why JDSU Bought Scion JDSU is wasting its resources in acquiring companies. The company has a lot of problems in compensation and stock options to its senior management. A ompany that engages in this kind of activity is not going to gain acceptance of its products.
Physical_Layer 12/4/2012 | 10:10:21 PM
re: Why JDSU Bought Scion Come on... the list of potential customers is obvious to anyone in the business. There are only a handful of serious players that you want to target.
gran_poohbah 12/4/2012 | 10:10:21 PM
re: Why JDSU Bought Scion This 'found' presentation wasn't by any chance marked confidential was it?
benson 12/4/2012 | 10:10:20 PM
re: Why JDSU Bought Scion To the editors of LR;

This is reporting??? Could you have also mentioned the following facts:

-When JDS bought PIRI via the SDL acquisition, it was the #2 or #3 vendor of AWG's, with a customer list virtually identical to the one SCION presented.

-Somehow, though, in a matter of only 2 years, JDS managed to squander this business, as well as its former PLC acquisitions (remember IOT????). Lightwave Microsystems and others have taken advantage of this collapse to move into the top three club. Any discussion of how this happened? What will they do to prevent this from happening with Scion, which is NOT an established player.

-Hey, Scion passed 1221: what a coup!! But then again, maybe that DID impress the PLC management at JDS.

-Besides the slick marketing brochure (which you acknowledge), could you please explain how SCION/JDS could dislodge the current leaders during this nuclear winter? Companies are in the process of reducing the number of vendors. What does Scion bring to the table?

-As someone said in a previous post, this list is obvious. If you want to sell AWG's, whi else would be on this list?

All in all, it looks like JDS will maintain its successful track record in PLC's.


DCM 12/4/2012 | 10:10:19 PM
re: Why JDSU Bought Scion One reason JDSU may have bought SCION is to fill in the product family. As Benson stated GǣCompanies are in the process of reducing the number of vendors.Gǥ The smaller players need to partner with the big boys in order to get their products noticed. Cisco is reducing their preferred vendors by a third over the next 12 months. If you are a start up there is little chance you can sell your product to Cisco, unless your Uncle is a VP, or your brother is the design engineer.

Bobby Max stated GǣA company that engages in this kind of activity is not going to gain acceptance of its productsGǥ. JDSU already has its products accepted by the industry. It is like Cisco, they rarely have the best technology, but the company will be here next year, it is a save bet to buy from Cisco. JDSU is so large that they do not have to have the best products or best price, just the ability to hang in there and be there next year.

I agree with Physical_Layer, it is very obvious who your target customer would be. The question is how much are they buying. A few samples do not count as sales.

Benson is right- Most large companies do not know how to get synergy from an acquisition. Alcatel has lost billions buying companies and not being able to build a US base of companies that have anything close to the value before they where acquired. JDSU has alos acquired a lot of companies and not been able to reap the rewards.

Touch 12/4/2012 | 10:10:17 PM
re: Why JDSU Bought Scion From a technical point of view....

IOT (Germany) used ion-exchange to make their waveguides. They did OK with splitters, but AWGs using this technology are unworkable.

PIRI used FHD (flame hydrolysis deposition) to make their AWGs. This technology is workable, but does not have as good refractive index uniformity (and thickness uniformity) as PECVD (plasma-enhanced chemical vapor deposition).

PECVD is used by Scion, Lightwave Microsystems, IONAS (a wafer foundry in Denmark) as well as a number of other commercial and academic labs.

In order to make AWGs with high channel counts (40 and 80) and world-class cross-talk performance one needs excellent phase control in the array and low phase errors. Layer thickness variations, refractive index variations, and sidewall roughness can ruin the performance of an AWG.

So, I am not surprised that JDSU would buy a fab that uses PECVD. It is clearly the winning technology for making silica-on-silicon waveguides.

By the way, I have used all three fab techniques to make AWGs, and PEVCD really is technically superior.
poly anna 12/4/2012 | 10:10:15 PM
re: Why JDSU Bought Scion There are still a bunch of companies that are touting optical polymer AWG's as viable. They are not, and most of those companies are shutting their doors as we "speak". I agree that PECVD will provide the most manufacturable solution. I reluctantly digress from the topic to paraphrase, once again, "optical polymers will be very popular in the 23rd century".

Best of luck to all who have lost their jobs due to this market downturn. Peace.
MasterLuke 12/4/2012 | 10:10:10 PM
re: Why JDSU Bought Scion I was not aware that Scion used PECVD. I have heard that it was sputtering and/or LPCVD. Do you have more detailed information of their processing technology?
Bongiorno 12/4/2012 | 10:10:07 PM
re: Why JDSU Bought Scion Will not the real winner be who integrates AWG's with other components lightwave microsystems, NEL, Hitachi cable and Bookham have MUX-VOA
products avialable (JDSU use at the moment a hybrid approach)and which technology will iltimatlwin out on the integration. Silica,polymer,Silicon or InP
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