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As the slump in the telecommunications market drags on, the entire industry is experiencing the kind of forced consolidation that would make Darwin proud. Thanks to overfunding in 2000 and 2001, the optics industry in particular has been left with lots of startups targeting markets that may now be years away from materializing.
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One promising startup that has thus far managed to survive the downturn is Santa Clara, Calif.-based C Speed Corp.
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C Speed is developing an optical switching subsystem based on its proprietary 3D MEMS technology. C Speed’s product uses a unique modular MEMS architecture that is designed to make its subsystem easier to manufacturer and package.
“The difference is in the way our system is raised and controlled,” says CEO Dwain Aidala. “Our design has no rubbing surfaces, giving it greater long-term reliability.”
Aidala says that C Speed’s design also has a shorter optical path than other 3D MEMS designs. The “optical path” refers to the distance from a fiber input to the first steerable mirror on the switch fabric. The short distance makes it easier for light to reach the mirrors, creating a faster and more consistent switching performance.
Another advantage to C Speed’s approach is its scalability. The company’s first subsystem will have between 80 and 160 ports with the ability to scale to port counts in the thousands down the road. This allows customers to take a “pay as you grow” approach, meaning they pay only for what they need at the time of purchase while having the option to increase switching capacity later on.
C Speed is still in development stage, although Aidala says the technology is being evaluated in several carrier labs.
“I have concerns about companies that are still in development,” says Marlene Bourne, a MEMS analyst with In-Stat/MDR. “By the time they need customers it may be too late.”
Two of C Speed’s main competitors, Agere Systems and Calient Networks Inc., already have announced customers and are shipping for revenue. Bourne also notes that the basic architectures and fabrication techniques used by 3D MEMS manufacturers are quite similar, meaning market timing may end up being more important than minor product differences.
Still, it’s too early to pick winners in the nascent optical equipment market. In-Stat/MDR expects the market for optical networking equipment to increase from just $33.4 million in 2001 to $1.825 billion in 2006. MEMS technology is expected to capture a fair share of that market.
According to Aidala, C Speed’s market sweet spot is areas in the network where metropolitan fiber rings interface with long-haul traffic. At these points, C Speed’s switching system can help carriers limit the number of costly electronic conversions they have to perform by enabling traffic not destined for a particular metro area to pass through without being converted.
C Speed is betting that cost-conscious carriers will be attracted to its system because it is both scalable and conducive to high volume manufacturing. However, the company’s most immediate concern is trying to properly position itself while waiting for the market to turn around. C Speed has raised $15 million to date and is in the process of raising a series C round.
With most telecom equipment vendors already writing off 2002, Aidala says he realistically expects the market for optical switches to pickup in late 2003 or early 2004.
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Company file: C Speed Corp.
(last updated May 20, 2002)
Company
C Speed Corp.
Headquarters
2875 Northwestern Parkway
Santa Clara, Calif., 95051
History
C Speed was incorporated in 1997 but didn’t become an active entity until 1999. Co-founder Paul M. Hagelin was one of the early researchers involved in applying MEMS technology to the optical switching field. After raising initial funding in 2000 the company has spent the last several years developing its technology and building out its engineering department. CEO Aidala joined the company in February of 2001 from Mitsubishi.
Industry
Switching equipment for telecommunications
Small tech-related products and services
C Speed develops and manufacturers scalable MEMS-based switch fabrics, which use micromirrors to provide the basis for optical crossconnects and add-drop multiplexers. C Speed’s products are sold to system integrators for use in telecommunications networks.
Management and founders
Employees
54
Investment History
C Speed first received VC funding in January 2000. The company raised $6.4 million from Advent International Corp. and private individuals, including Dado Banatao, a managing partner at Tallwood Venture Capital. In January 2002 the company raised $8.2 million from the same investors. C Speed is currently in the process of raising its next round of funding.
Competitors
Goals
Surviving the downturn while still being positioned to when the market returns. “We’ve spent the last year-and-a-half solidifying our internal management and external partners to be ready to execute,” says CEO Dwain Aidala.
Why they’re in small tech?
“Paul Hagelin (co-founder) and C Speed recognized the benefits of MEMS technology against this application early on. There is an advantage from a design point of view when you can take the characteristics of silicon and apply them to mechanical functions. We focused on 3D MEMS technology because we felt 2D MEMS architecture isn’t going to scale to the level of port count that networks are realistically moving to,” Aidala says.
What keeps them up at night
“Trying to figure out when the venture capitalists will put venture back into their vocabulary,” Aidala says.
Contact
Recent news
C Speed highlights its 3D MEMS patents
C Speed appoints MEMS ‘founding father’ chairman of its technical advisory board
— Research by Gretchen McNeely