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DWDM

Iolon and Innovance Deal: Good Omen?

Yesterday's announcement that Iolon Inc. will supply tunable lasers to Innovance Networks may be good news for the market as well as the startups involved (see Iolon Delivers Tunable Laser) .

The agreement calls for Iolon to supply widely tunable (100-channel) lasers for use in Innovance's core optical networking products, set for release next quarter.

The deal is significant on several fronts. It's the first public customer announcement Iolon has made, and the first supplier acknowledgement from Innovance. While neither party will disclose terms, Iolon says it's a long-term, multimillion-dollar contract.

It's also a procurement contract, versus a design win -- the difference being that it involves delivery of widgets rather than just plans to build them. "Design wins indicate a system vendor will design its transponders around our tunable laser," says Saeid Aramideh, Iolon's VP of product management. Iolon's been working with Innovance since July 2001, so there's been plenty of time to move beyond the design phase.

Aramideh says Iolon has 18 more prospective customers in the works, but those will be design wins when they're announced over the next few months.

Iolon also says it will have product announcements at the Optical Fiber Communication Conference and Exhibit (OFC) next month.

Iolon seems eager to show that it's arrived on the optical scene, instead of looking good on the periphery. "We're ramping toward volume and completing our Telcordia compliance. We thought it was a good time to announce the agreement," says Aramideh.

It's good timing for Innovance too, because it fuels that startup's claims about a second-quarter product release. After all, if Innovance is so far beyond the design stage, it's clear it's been busy building its wares.

Innovance eagerly confirms this: "We plan to announce actual product commercial availability in the second quarter, not just a prototype," says Innovance COO James Frodsham. He won't be specific about beta tests or trials but says, "We are quite pleased with our traction with leading carriers. We have tremendous alignment in terms of our architectural vision."

Innovance's vision is of a DWDM system that will enable carriers to set up and tear down wavelengths quickly and easily across the network core. The use of Iolon's Apollo-L tunable laser will help, because it's designed to work in the L-band of wavelengths (1570 to 1620 nm), which is increasingly being deployed for optical gear over the conventional C-band (1520 to 1570 nm) because it supports higher counts of DWDM channels. And higher counts mean systems with larger capacity.

Hang on: Isn't the core network the one hit hardest by the current downturn? Yes and no, says Frodsham.

"The long-haul market is down significantly, and 2002 is shaping up to be tough year," he acknowledges. "But traffic volumes in the core are still growing, and capital spending is still being planned." He says there's been an uptick in RFPs (requests for proposal) that indicate IXCs (interexchange carriers), Innovance's key prospects, are starting to focus on their next moves.

"We see next-generation overbuilds opening up in the back half of this year, with broader movement in 2003," he notes.

Frodsham's confidence is shared by Iolon. "The long-haul market is the worst hit in this downturn, but Innovance will reduce capex and opex for carriers. It's pretty compelling," says Aramideh.

There's more: This past Sunday, the Ottawa Business Journal reported that Innovance is on the verge of announcing a monster round of funding, totalling CN$96 million (US$60 million). Citing sources close to the company, the paper stated that funding was achieved this past fall, but the deal stayed open for several more eager investors before being recently finalized.

Sources at Innovance, including Frodsham, refuse to confirm this report, but rumors of funding have been swirling for months (see Innovance Quietly Raises $17M in Debt and Innovance CEO: Layoff Was a Tuneup). And then as now, analysts say big funding from a range of sources implies that a large customer's waiting in the wings.

Does all this hopeful news indicate that perhaps the worst is over? Not so fast. Even if Innovance has one or more big customers lined up, the largest carriers aren't immune to pulling out of supply agreements these days, even announced ones, as submersion of the deal between Qwest Communications International Inc. (NYSE: Q) and Corvis Corp. (Nasdaq: CORV) recently showed (see Corvis: How Low Can It Go?).

The outlook's also cautious on the components front. In a recent report, JPMorgan H&Q Equity Research says that, while tunable lasers such as Iolon's will be "critical" to next-generation networks, they're still in the growth stage: "While it appears the ultimate growth catalyst for tunable lasers will be their use in dynamically provisionable networks," writes analyst Jeffrey Lipton and colleagues, "large-scale deployments of these networks are likely one or two years out."

— Mary Jander, Senior Editor, Light Reading
http://www.lightreading.com
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Say Uncle 12/4/2012 | 10:54:53 PM
re: Iolon and Innovance Deal: Good Omen? Oh that's such a sweet testimonial. Please answer the following multiple choice:

a. Are you his mother?
b. Do you work at Iolon?
c. Are you an investor in Iolon?

For you to hear that they are "head-and-shoulders above the rest" reveals your colors. There are at least 3 other companies who are in the labs at almost all of the systems houses - these guys rarely come up. But then again, I'm awaiting announcement of the 18 customers. And wow - it is one huge market for tunables out there...must be in the 100's of dollars...

>> Give him a break. At least they are doing something and are the first ones with viable tunable lasers in the marketplace. Iolon has a great product from what I hear from people who have tested everyones product offering in tunables. I consistently hear that Iolon is head and shoulders above the rest.
The_Holy_Grail 12/4/2012 | 10:54:52 PM
re: Iolon and Innovance Deal: Good Omen? Prediction based on the 3x factor: It won't fly as direct replcements for fixed lasers
hadware_dsgn 12/4/2012 | 10:54:47 PM
re: Iolon and Innovance Deal: Good Omen? How can a poster with username "Cyras Forever" be critical of hype from anyone.

Cyras was the Australian Short Track Speed Skater of Optical Networking Companies.
photons-r-us 12/4/2012 | 10:54:44 PM
re: Iolon and Innovance Deal: Good Omen? You forgot the correct answer: (d) None of the above. I know what is happening in the industry. They will not get all 18 customers but they will emerge as the premier player in tunables.

Light reading boards seem to attract mindless critics of the industry in droves.
JerryMacguire 12/4/2012 | 10:54:40 PM
re: Iolon and Innovance Deal: Good Omen? When an industry is in chaos this is the type of news that is thrown at us.
As mentionned in a previous thread, we are dealing with two private companies, relatively insignificant in the optical landscape, announcing an inflated deal based on purely exotic forecasts.
To draw a parallel, it would be like finding in the cover page of the Washington Post an article describing a non agression pact signed between The Ivory Coast and Guatemala.
The bottom line is who the hell cares.

The optical industry marketing geeks still firmly beleive that multiple press releases covering just about anything is the way to go. Communications overhead morons still fear that they are missing the boat if they don't release statements on a regular basis even though the are void of content.
My wife and both my brothers works in various industries and for companies that generate as much revenue as Lucent and Nortel(but actually turn in respectable profits) but we never here about them. They were all blessed by being spared the now notorious optical bubble.
Not until all this none sense has been eradicated and competent engineers, Honest CEOs, and professinnal Sales&Marketing people are back in controle again shall we see our industry flourish again. For the time being putting up with all this national inquiry calibre news is the norm.
Touch 12/4/2012 | 10:54:38 PM
re: Iolon and Innovance Deal: Good Omen? Am I missing something? Why is this product so exciting?

The Iolon tunable laser is CW. It needs an external modulator. Surely this will be expensive when the cost of a 2.5 Gb/s or 10 Gb/s modulator is added in.
Milano 12/4/2012 | 10:54:34 PM
re: Iolon and Innovance Deal: Good Omen? Yes it will be expensive, and in the current context no carrier out there is looking at increasing their capex.

The case for the reduction in opex is less clear. While we all sense that a tunable architecture is more flexible, I haven't seen much studies trying to quantify the benefits.

In any case Innovance and Iolon are in for the long run - 2004-2005. Their job is to keep their credibility to keep the $$$ flowing.

M.
Golden_Dawn 12/4/2012 | 10:54:32 PM
re: Iolon and Innovance Deal: Good Omen? I am none of the above, and I don't know of any spec sheet better than Iolon's. If they are not in your system test lab, that is your problem. They are delivering, they have a reliable, working device and they are ready for volume.

You apparently don't know much about this company or its products. I am not sure what value you are adding to this by badmouthing Saied. This company has a legitimate shot at success, and I can't say that about any other tunable laser manufacturer that I know of.




>>Oh that's such a sweet testimonial. Please answer the following multiple choice:

a. Are you his mother?
b. Do you work at Iolon?
c. Are you an investor in Iolon?
lpthobserver 12/4/2012 | 10:54:30 PM
re: Iolon and Innovance Deal: Good Omen?
So much in the press about tunable lasers, where are these co.'s getting their wavelength lockers?
Do most of these manufacturers purchase them internally or procure them on the outside?


Thanks
Golden_Dawn 12/4/2012 | 10:54:23 PM
re: Iolon and Innovance Deal: Good Omen? All companies and institutions issue press releases that are insignificant. I guarantee you that whatever company your family members work for, you can find many press releases from them.

The reason why you heard about this press release is because it was on Light Reading, and it is LR's job to report on all press releases in the optical sector. This is not big news, and I don't expect to see it anywhere but LR. I do expect to see it on LR, however.

Eventually there is going to be a turnaround in this business, and eventually there will be two obscure companies that sign a deal that results in both of them making money. Maybe this is not that, but I expect LR to report it nonetheless so that I can be kept informed.

Now, if you had two public companies issuing a press release about a long haul 4000 km transmission test, never mentioning that it was sub-Gbps, now that would be unnecessary hype (oops, that happened already).




>>When an industry is in chaos this is the type of news that is thrown at us.
As mentionned in a previous thread, we are dealing with two private companies, relatively insignificant in the optical landscape, announcing an inflated deal based on purely exotic forecasts.
To draw a parallel, it would be like finding in the cover page of the Washington Post an article describing a non agression pact signed between The Ivory Coast and Guatemala.
The bottom line is who the hell cares.

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