Onetta Scores Three Customers

Startup Onetta Inc. has wasted little time getting the ball rolling. The company, which is less than a year old, quickly drafted a seasoned management team led by former Redback Networks Inc. (Nasdaq: RBAK) CEO Dennis Barsema, then last week announced a $56 million round of financing (see Onetta Raises $56M for "Intelligent" Amp).

Today the company announced its first products -- EDFAs (erbium doped fiber amplifiers) -- and named customers that are using the products.

“Our strategy is to win accounts with some smaller startups first,” says Barsema. “They have shorter sales cycles, which makes them good ones to go after first. We’re hopeful that we’ve put our chips on the companies that will be successful."

Sycamore Networks Inc. (Nasdaq: SCMR) and stealthy startup Celion Networks have both signed on to buy the IOE 2000 L-Band products for use in their DWDM (dense wavelength-division multiplexing) systems. And PhotonEx Corp., a closely watched startup that is building 40-Gbit/s systems (see Photonex Has a 40-Gbit/s Idea), plans to use the IOE 3000 C-Band EDFA (see Onetta Shipping 'Smart' Amplifiers).

"PhotonEx is a very sexy startup, and that is exactly the kind of customer you want to get in with." says Rick Schafer, an equity research analyst with CIBC World Markets.

Onetta has already started generating revenue — over $10 million in its first year, according to Barsema.

While the company’s strategy is to go after the amplifier market first, it plans to add intelligence to other types of optical modules as well, even creating new categories of prepacked optical components that will be ready to talk to systems through intelligent software.

But for now, it is targeting the already established EDFA market with its two flagship products, the Onetta IOE 2100 L-Band and IOE 3100 C-Band amplifiers. By the end of 2001, Onetta plans to introduce an intelligent Raman amplifier.

While amplifiers aren't the most exciting products, they are the cornerstone of any WDM application. They are especially critical in long-haul and ultra-long-haul systems, because they are used to keep the light signals from fading out. And with optical networking expected to grow to $22 billion by 2004, according to Ryan Hankin Kent Inc. (RHK), the opportunity for amplifiers looks pretty good.

“This is a huge market and it's growing fast,” says CIBC's Schafer. “It’s a good market to attack if you can get a toe-hold.”

But how will Onetta differentiate itself in this market from big players like JDS Uniphase Inc. (Nasdaq: JDSU), Corning Inc. (NYSE: GLW), Agere, and Nortel Networks Corp. (NYSE/Toronto: NT), which also sell either C-band, L-band, or Raman amplifiers? This is where the intelligence embedded in the product comes in.

Onetta claim that its amplifiers provide better quality of service when traffic is dropped in and out of an optical pipe, low noise that allows for transmission over longer distances, and higher density. Onetta officials also say the software intelligence will allow amplifiers to be managed remotely through the optical systems of its partners, so that wavelengths may be added and dropped without requiring technicians to adjust or replace the amplifier by hand.

But Schafer says he isn’t so sure that the intelligence spin is going to catch on in the amplifier market.

“Intelligence is a plus,” he says. “It’s very important in switching. But on the component level it seems like it’s of lesser importance. It’s not one of the buzz words going around today.”

-- Marguerite Reardon, senior editor, Light Reading http://www.lightreading.com

Petabit 12/4/2012 | 8:11:26 PM
re: Onetta Scores Three Customers Where do I get the EDFA pricing numbers from?

I don't know; you hear things, you work in the industry, you go to some trade shows and ask people, you talk to suppliers, you buy some, you build some. And after all of that you quote really wide price ranges to avoid anyone getting upset.

Another question: Why do Onetta publish so many papers? For an early stage startup, trying to protect their IPR, they seem to be publishing a lot. They are beginning to look like Bell Labs. Oh, wait - they were Bell Labs. Sorry.

markadam 12/4/2012 | 8:11:29 PM
re: Onetta Scores Three Customers Oops, that's EDFA costs.

markadam 12/4/2012 | 8:11:29 PM
re: Onetta Scores Three Customers Hi There;

I have been trying to find data on ADFA costs. Where did you get this stuff from.


Ted F. 12/4/2012 | 8:48:47 PM
re: Onetta Scores Three Customers All reports need to be adjusted, slightly. But not so much, b/c if take a look at the capex of the carriers you'll realize that the vast majority of capital spenders are the more established carriers, ILECs and IXCs. The CLECs and the like- who will have a much harder time raising money in the public markets now- have a much smaller capex and shouldn't mess up the spending numbers too much. the more established carriers have deeper pockets to weather the storm and will continue to build out and improve their infrastructure.

have a look at Hambrecht to get a better idea of what i'm talkin' about. The material may be slightly dated but the proportions are still accurate.

exphoton 12/4/2012 | 8:48:49 PM
re: Onetta Scores Three Customers Any issues with IP ? The whole area of Optical Amplifiers is fraught with litigation - how is Onetta defending itself from the David Paynes and the Littons of the world ? Also, how about the Pirellis, Lucents and Nortels ?
westmoreland 12/4/2012 | 8:49:00 PM
re: Onetta Scores Three Customers
Could it be that RHK's report projections out to 2004 are now all wrong, given that the market is now dramatically different? Aren't then ALL previous analyst predictions and reports simply inaccurate?

the advocate 12/4/2012 | 8:49:15 PM
re: Onetta Scores Three Customers This product is pretty cool.

Are you working with favored suppliers of optical fiber?

Is it tuned for +D/-D fiber?

What type of Q factors and BER's are you seeing?

Are you developing S/FEC?

Larry, Monkey 12/4/2012 | 8:49:18 PM
re: Onetta Scores Three Customers http://www.lightreading.com/do...
Petabit 12/4/2012 | 8:49:19 PM
re: Onetta Scores Three Customers Bare EDFAs (just the optics and a few bits of electronics) go for $10-30k. The complete EDFA cards (fully packaged with all the control etc) go for $30-300k.

Onetta's claims sound sort of interesting, considering that Nortel's components arm now ship products that do more...


Onetta have announced an interesting set of customers though.

Ted F. 12/4/2012 | 8:49:19 PM
re: Onetta Scores Three Customers how much do these amplifiers go for?

I always wondered, when big guys like Corning lay their fiber system, what percentage of the system's cost is going toward EDFAs and other components vs. the actual cost of the fiber and laying it? Anyone?

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