Sycamore’s Stealth 40-Gig Strategy
If successful, the gambit could allow Sycamore to leapfrog its archrival Corvis Corp. (Nasdaq: CORV) and others, in the race to deliver ultrahigh-speed, ultralong-haul products to carriers (see Vendors Prepare for 40 Gigabit Future). Ultralong-haul technology offers the potential to vastly reduce the cost of installing core networks by reducing the amount of regeneration equipment that service providers must install to boost optical signals.
“It makes sense for Sycamore to fund something like [Mintera]. It’s a smart use of resources,” says Scott Clavenna, president of PointEast Research and director of research at Light Reading. “Ultrafast 40-Gbit/s OC768 is very valuable for leadership positioning. Anyone with access to that technology will have a clear edge over suppliers stuck at OC192.”
If Mintera is successful in developing its products, the most likely scenario is that Sycamore will acquire the startup, incorporating its technology into its product line -- specifically by providing high-speed interfaces on its SN 10000 optical switch.
Sycamore declined to comment on any aspect of this story.
Of course, Mintera is not alone in developing 40-Gbit/s components. Nortel Networks Corp. (NYSE/Toronto: NT) has already demo’d a system that can transmit data at speeds of 40 Gbit/s and above. It says it will ship next year. Mintera also faces stiff competition from smaller players, such as CyOptics Inc..
How important is it for Mintera and, by extension, Sycamore, to win the 40-Gbit/s race? If historical precedent is anything to go by, it’s key. Consider that Nortel’s current success in optical networking has largely been predicated on the fact that it “saw the ball” earlier than its competitors, snagging a three-year lead in the development of 10-Gbit/s technology. 40 Gbit/s represents the next speed barrier.
Mintera’s intriguing staff lineup bodes well for its odds of succeeding. Mintera’s founder, Menachem Abraham, has a proven track record in the networking industry, with successes at both Chipcom and Prominet. According to Light Reading’s sources, he will shortly be joined by a trio of top engineers -- two from Bell Labs and one from MIT. (Light Reading has been provided with the names of the engineers but is not releasing them because they have not yet left their current employers.)
Mintera is intriguing for another reason as well: It exemplifies the continuing erosion of venture capital's position in the process of funding optical networking startups. Mintera’s funding, which is rumored to exceed $20 million, appears to come exclusively from three non-VC sources: Sycamore, Menachem Abraham, and Jim Murray (formerly a VC at Columbia Capital, who now has set up shop as an independent investor). Abraham and Murray confirm that they have put their own money in Mintera.
VCs are miffed. “We wanted a piece of this -- so did everybody else. We tried and failed to get in the game," said one, off the record. Another VC, also speaking anonymously, sounded a note of caution. “You want the VCs’ spin? Sure. The company might be bought, fine. But tell me what happens if it isn’t. It will be real interesting to see how well individuals and companies will be able to fund startups over a long period of time.”
Right now, the biggest blot on Mintera’s copybook could be its company name, which has been poorly received by most marketing types. “What, are they ushering in an age of mint?” wisecracks one industry observer. But if it ends up being spun in by Sycamore, the name problem is one that Mintera won’t have to deal with for long.
Mintera’s Abraham told Light Reading via email that his company has “no agreements with any partners” and that it has “not had a round of external financing.”
-- Stephen Saunders, US Editor, Light Reading http://www.lightreading.com