Components startup Optium Corp. broke its silence yesterday, to announce that it has appointed ex-JDSU CEO Kevin Kalkhoven chair of its board of directors (see Kalkhoven to Chair Optium).

Kalkhoven, who now heads his own VC firm, KPL Ventures, has been involved with the startup since he helped fund it in May 2001 (see Optium Scores Another $35.5M). Other investments he has made include Innovance Networks and Iolon Inc.

Kalkhoven's decision to take a more active role at Optium should be viewed as a vote of confidence in the startup, says Optium's CEO Paul Suchoski. "He views Optium as one of his best investments," Suchoski boasts.

Optium, which makes next-generation transponders, appears to be on the fast track. Founded in fall 2000, it has pulled in nearly $50 million in two rounds of funding from Battery Ventures, Corning Inc. (NYSE: GLW), and Texas Pacific Group, in addition to KPL Ventures. In a little over a year, it has a six products available, claims to have scored design wins with major systems houses, and is on track for volume production around the end of the year, according to Suchoski.

"We have a very strong team who know how to ramp into high volume quickly," he notes. Suchoski himself was co-founder, vice president, and general manager of a division of JDS Uniphase Inc. (Nasdaq: JDSU; Toronto: JDU) making modulators. Optium's co-chairman and president Eitan Gertel played a similar role in another JDSU division making transponders. In fact, most of the startup's key personnel got their experience from JDSU. No wonder Kalkhoven feels at home.

So far, Optium has preferred to keep things fairly low key while it gets underway. It's taking the prudent approach of having products safely in customers' hands before making detailed product announcements. But it is willing to talk in general about its 10-Gbit/s transponder product line.

"There are four major things that customers ask for [in a transponder]: much lower price, much lower power consumption, small size, and reduced part numbers," says Suchoski. "We think we can deliver on all four."

Key to achieving the first three on the list is the optics technology, which was developed at the Center for Research and Education in Optics and Lasers (CREOL) at the University of Central Florida. Although details of this are still under wraps, Suchoski does says that the technology "makes it possible to get the eye-quality [read: signal quality] of an externally modulated laser with the price you'd expect from a direct modulated laser."

To tackle the issue of reduced part numbers, all of Optium's transponders are multirate. Each transponder is capable of supporting OC192 Sonet, gigabit Ethernet, or 10-gigabit Ethernet with forward error correction (FEC).

This in itself is not unique. Optium's competitors -- including Agere Systems (NYSE: AGR), Intel Corp. (Nasdaq: INTC), Hitachi Ltd. (NYSE: HIT; Paris: PHA), and JDS Uniphase -- see the same opportunity.

But Suchoski says that's not the only way that Optium can simplify things for its customers. "We have one module that's rated at 2 to 20 kilometers," he says, "But because it's priced competitively with a 2km part, we can eliminate several columns in the product matrix."

All that is just a start. Optium aims to offer functionality beyond a basic transponder. "We have the only module on the market that has a microprocessor inside," claims Gertel. In the existing products, this enables customers to configure modules for their particular requirements -- for example, by selecting the appropriate bit rate. It also keeps track of information from monitors integrated inside the transponder, the idea being that the customer can predict when a module is about to fail.

Another startup with similar ideas about putting more electronic functionality inside the module is Network Elements Inc. But it is promoting its product on features alone, rather than price (see Startup Simplifies Line Cards).

Next year, Optium plans to launch products with more and more electrical functionality on board, such as framing functions and tunable dispersion compensation. It also has a wavelength-tunable device planned.

According to CEO Suchoski, Optium is seeking to close a third round of funding in February 2002 and expects to reach profitability three or four months after that. If this were November 2000, rather than 2001, the next question would be: When's the IPO?

— Pauline Rigby, Senior Editor, Light Reading
http://www.lightreading.com