By Richard Acello
Small Times Correspondent
SAN DIEGO, March 12, 2002 — The telecom slump is leading many companies into a vicious spiral: Carriers are reluctant to purchase equipment from suppliers. But those suppliers, who are also financially strapped, are selling equipment that can reduce costs and increase competitiveness for the carriers.
Even so, startups with venture capital continue to innovate and come out with new products. A case in point is Newark, Calif.-based LightConnect Inc. The manufacturer of MEMS-based, fiber optic components will bring its new Dynamic Channel Equalizer (DCE) to the Optical Fiber Communications Conference and Exhibit, opening March 17 at the Anaheim Convention Center in California.
The DCE is a module roughly 4 inches wide and 8 inches long, powered by a MEMS
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| LightConnect’s Dynamic Channel Equalizer can control and attenuate wavelengths at a fraction of the cost compared to existing optical network architecture, according to the company. |
“Typically, in one fiber you have between 80 and 100 wavelengths for long haul voice or data transmission and the first thing you do before you process the wavelength is to separate them and direct the traffic and you need attenuators,” said Yves LeMaitre, vice president of marketing for LightConnect.
The DCE can control and attenuate the wavelengths at a fraction of the cost compared to existing optical network architecture, said LeMaitre, and with a fourfold reduction in size and power. It can be used in optical multiplexers, wavelength modules and in optical switching applications. The DCE is also software configured, LeMaitre said, so that wavelengths can be selected for allocation to output ports.
LightConnect’s current product line includes a fast variable optical attenuator and a dynamic gain equalizer. LeMaitre said the company has a customer base of more than 40 vendors for these products, which are manufactured using standard CMOS technology.
INVESTORS SPRING FOR SECOND ROUND
Founder David Bloom developed the diffractive MEMS technology while he was a professor at Stanford University.
Using the MEMS component, said LeMaitre, “we can select individual wavelengths and either attenuate them or block them. The MEMS component creates a diffractive effect in the light path to eliminate certain channels or to attenuate (them).”
The DCE development has been funded by an undisclosed “large system vendor” and “we already have orders for systems,” LeMaitre added. Sample quantities of the DCE will ship in the second quarter.
LightConnect may be bucking the market with its product introduction, but so were Incubic LLC, Sevin Rosen Funds and Morganthaler Ventures, among others, who beamed $15.8 million into LightConnect in a July 2001 second round of financing. The company’s $8.4 million first round was funded in June of 2000, and was led by Sevin Rosen and Incubic.
LightConnect has 58 employees, and though LeMaitre concedes that “we are feeling the slowdown of the economy,” he said “our burn rate is low so we are in good shape.”
LightConnect’s revenue target for 2002 is between $5 and $10 million.
Though some analysts maintain that MEMS companies like LightConnect were born too late to prosper in the telecom spending spree of the late ’90s, Marlene Bourne, senior analyst for Cahners In-Stat, disputes that view.
“I don’t believe that,” she said. Though the market for telecom vendors is showing “ghastly sales” overall, Bourne said, “there are companies that are buying in Europe and Japan.”
Bourne said the fact that investors were willing to stake LightConnnect to a larger second round in a bear market “bodes well” for the startup.
Lawrence Gasman, president of Communications Industry Researchers, based in Charlottesville, Va., said companies like LightConnect are always ahead of the technology curve.
“It’s important to understand the value chain,” he said. “Say you bring out a product at the (trade) show. Someone says, ‘good product’ and later they say, ‘we’d like to design it into our system.’ First, you get the design win, then the business.”
On the wisdom of bringing out product now, during a telecom slump, Gasman said: “You could unexpectedly get revenue from bringing out new product now, versus zero revenue if you don’t.” Even with the slump, “it’s not like (telecom supply) is a tiny market.”
In any event, Gasman said he expects signs of growth in the telecom sector as early as the third quarter this year: “So if (LightConnect) is going to catch the next tech wave, their timing is about right.”
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