Network Photonics Shuts Down
Based in Boulder, Colo., the company had 66 employees on its last day.
CEO Steve Georgis sent a note to analysts yesterday, explaining that the company didn't want to wait in vain for a market recovery. ”It has become obvious that the market for photonic switching and reconfigurable optical networks is not going to emerge in any big way soon. When it does emerge, we estimate that the size of the addressable market will be small," he wrote.
Given that outlook and the substantial money the company raised (see Network Photonics Raises $106.5 Million), Network Photonics didn't appear likely to recoup. "We couldn't come up with a good market scenario that was going to give a good return on investment," Georgis said in an interview.
Network Photonics started out building an all-optical switch for metro access networks. As the market bubble deflated, those plans were scaled back, but the company did manage to produce a subsystem in early 2002 (see Network Photonics Scales Back and Network Photonics: A Corvis Copy Cat?).
As with most all-photonic switching plays, Network Photonics based its technology on micro-electro-mechanical systems (MEMS), using tilting mirrors to shunt light to the appropriate ports. But the company's CrossWave system added a twist: a prism-like filter that split a WDM stream into component wavelengths.
This allowed Network Photonics to use just one row of mirrors, one per wavelength. Other MEMS hopefuls -- the still-surviving Calient Networks Inc. among them -- used square grids of mirrors, and the most ambitious startups allowed those mirrors to swivel in arbitrary directions, the so-called "3D MEMS" approach. Network Photonics claimed its way was cheaper (fewer mirrors) and easier to control.
Larger optical MEMS switches never took off, however -- a trend most dramatically marked by the recent closure of OMM Inc. (see OMM: The End Is Near). Now, Network Photonics' time has come.
Georgis and a skeleton staff will remain to sell off the company's assets. That so much technology might never resurface -- not just Network Photonics', but the industry's in general -- is going to be one of the "tragedies" of the recession, he says.
"A lot of breakthrough R&D has been done [in the industry as a whole], and a lot of that is going to just go away," Georgis says. "A couple of years from now, people might look back and say, 'What happened to Network Photonics? They had a product we needed.'"
— Craig Matsumoto, Senior Editor, Light Reading
One major misconception within our industry (especially among VCGÇÖs) was that DWDM was the right technology at the right time that solved the important problem of fiber exhaust. The reality is that except for a few highly celebrated initial cases (the creation and success of Ciena notwithstanding), the majority of DWDM deployment was not to alleviate fiber exhaust at all. Instead, the transition was more about EDFA, which was extremely economically compelling compared to OEO 3-R regeneration.
As a result, many of the long-haul DWDM deployment that we have seen in the last few years which fueled the telecom bubble were deployed with just a few wavelengths (some were financially justifiable even with one wavelength). As a result, there are pretty of unlit wavelengths in the ground and as the industry continues to rationalize and eventually starts to recover, the carriers will only need to buy more line cards with limited opportunities for new systems or new architectures.
On the other hand, since there is little need for amplification in metro, the economic driver for metro DWDM will be based purely on the potential for fiber exhaust which would not be a problem for a very long time except in a few unique venues. Therefore the opportunity for GÇ£ReconfigurableGÇ¥-OADM is even further out since not only do we have to justify the need for multiple wavelengths but also the need for re-configurability.
In the last twelve months, we have seen many MEMS or non-MEMS component or subsystem companies shutting down, some of which have been reported and most have disappeared quietly.
The first wave of companies were those that never managed to develop a product.
The second wave were those that have shippable products but went out of cash.
Network Photonics and Transparent Network (both are USVP portfolio companies) are the beginning of the third wave which have products AND cash but the investors decided that they would be better served by taking back the cash, because they finally recognize that GÇ£the market is not going to emerge anytime soon and when it does, it will be small.GÇ¥
Free market capitalism is brutal but it works and like Clint Eastwood once said in one of his movies GǣDeserve has nothing to do with it GǪ Gǣ
Time for us to turn to a new page.