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TOKYO, June 5, 2003 — Remember OMM, the now-bankrupt company with great MEMS technology but not enough customers?
One lesson learned from the networking crash is that cheaper products are the most cheerful sellers in this miserable market. Nonetheless, engineers at Hitachi are convinced that their technology can go where other higher-priced, all-optical switches haven’t: into optical networks.
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So, can Hitachi succeed where OMM failed?
The answer is a qualified “yes” from Masaya Horino, Ibaragi, Japan-based MERL’s senior researcher, whose lab has developed what it says is a world-beating switch that will be ready for production in March 2005. Hitachi’s 8 x 8 port 3-D-MEMS switch packs a set of 2-axis mirrors that use a folding lightpath technique to avoid many of the problems of 2-D MEMS switches, and enable them to be packed into a tiny unit. The result is a device that’s 3 cm x 8 cm x 1.2 cm.
Horino said Hitachi isn’t the first company to go for smaller switches for metro networks, but it has done a better job designing one.
However, when Lawrence Gasman, president of Communications Industry Researchers Inc., was asked about the prospects for a MEMS optical switch, his reply could best be summarized as “what market?” and “what competitors?”
” ‘Cool’ don’t get you too far these days,” he said. While calling Hitachi’s technical claims “impressive,” he noted that Lucent has dropped out and OMM isn’t around to answer Hitachi’s claims.
“OMM didn’t fail because it had a bad product. … OMM failed because there was no market. Hitachi has the same problem. That said, footprint really is a big issue — especially for metro deployment. So if Hitachi’s claims about size are correct, this is a major competitive issue going forward,” Gasman said.
Hitachi will need all the help it can get, said Marlene Bourne, MEMS analyst for In-Stat/MDR, because the Hitachi Goliath is lumbering in relatively late in the game, with many ventures developing similar devices. What’s most important is getting engineering samples to customers and achieving Telcordia qualification, she said.
“There are still a couple of dozen companies worldwide pursuing the same thing — right now, anyway. However, many startups are in a very fragile position right now, and over the next year I expect more companies will go dark. Who’s left standing a year from now will be much more telling,” Bourne said.
So, why would a high-priced switch succeed when what Gasman calls the “all-optical networking fantasy” of 2000 turned into a phantasmagoria in 2001? Hitachi’s answer is that it offers a “complete solution” to a known customer base at the right time.
MERL’s Kouji Takaoka, another engineer behind the switch development, noted that the switch’s real value comes in the dispersion performance. Optical networks need fewer power amplifiers and attenuators, reducing overall systems costs. And he said that Hitachi is, overall, building a track record of sales in high-spec optical communications systems, despite the dearth of demand.
For example, Hitachi last year released its AMN 6050 dense wavelength division multiplexer (DWDM) — which makes single strands of fiber look like multiple strands, increasing data throughput without laying more fiber — middle haul system because it runs on both metro and long haul loops with a design that the company said slashed the number of amplifiers network builders need to complete systems. Takaoka said Fusion Communications Corp., authorized Hitachi as a DWDM vendor for Hitachi’s IP metro-networks, with Hitachi supplying its AMN601A DWDM to Fusion last October. Hitachi’s optical networks divisions are building and selling, and they want the switch.
Hitachi is confident that it can supply the new switches to other Japanese systems vendors such as Fujitsu Inc., Takaoka said.
In-Stat’s Bourne still needs convincing. “Just because they’re big doesn’t guarantee success at all,” she said. “In fact, if you take a look at who’s exited the MEMS switch segment over the past year or two, it’s been both large companies and startups alike.”
The other bet, of course, is that the market will recover.
Last June, when Hitachi started developing the switch as part of the company’s larger campaign to develop high-end optical networking equipment, Fuji Chimera Research Institute published a report predicting that the global optical MEMS market would grow from $500 million in 2001 to $5.9 billion in 2010. Fuji also estimated that optical MEMS would begin to capture about half the market in 2005, Hitachi’s entry year.
That was a year ago, and an optical networking recovery has yet to emerge. However, this April, Bourne herself predicted a combined annual growth rate of 41.8 percent through 2007 for optical MEMS in optical networks, an estimate less optimistic than previous analysis, but still suggesting a rising tide.
Finally, Takaoka argues that at about $300 a switch compared with $200-$300 for conventional electrical switches, Hitachi will offer a competitive product at the right time.
“I think that an important point for the success is timing,” Takaoka said.