According to enthusiastic reports from the Laser Focus World staff, optical switching generated much of the excitement at this year's Optical Fiber Communication (OFC) conference held in Baltimore in early March. In fact, OFC was literally swamped by attendees pursuing the latest technologies in optical communications—and more than a few were, maybe, looking for the next Cisco Systems. Venture capitalist Vinod Khosla of Kleiner, Perkins, Caufield & Byers (Menlo Park, CA) challenged the plenary session audience at OFC to look around at the giants of telecommunications today and then estimate how many would survive the decade. Khosla drew a comparison with the computer industry of two decades ago with the only survivors being IBM and Hewlett-Packard, two companies that have had to seriously reinvent themselves along the way.
I've no doubt that the executive conference rooms of the Lucents and the Nortels are the scenes of many an anguished meeting as these renegade optical switching startups pop up faster than groundhogs on a warm spring day. And the Vinod Khoslas of the venture capital world are only too happy to hand out enormous bags of cash to the likes of Xros (Sunnyvale, CA) and Tellium (Oceanport, NJ)—looking to make handsome returns on their investments. At OFC, startup Xros demonstrated a working prototype of a 24-port micromirror system that promises to give conventional electronic switching systems a run for their money. Look for more such startups in the next six months or so.
Wall Street takes notice
In our new companion publication, WDM Solutions (distributed with this issue of Laser Focus World: email Carole Root—[email protected]—to get your very own copy), Scott Clavenna of Pioneer Consulting LLC (Cambridge, MA) predicts that the market for optical switches will zoom from a mere $428 million this year to a whopping $10.3 billion in 2004. And there are signs, such as the SRO crowds at OFC and the frantic maneuvering of venture capitalists, that Clavenna's astounding predictions may be on the conservative side! Already the Armani-suited analysts of Wall Street are racing to meet with key executives at JDS Uniphase (San Jose, CA) and other market leaders. When the analysts begin to talk about micromirrors and lithium niobate switches, you know that the market is jumping.
Market researcher Clavenna says the momentum in the optical switch market today is behind microelectromechanical systems (MEMS) such as the micromirror systems first developed by Texas Instruments (Dallas, TX). Coming up rapidly in the field are such companies as Cronos Integrated Microsystems (Research Triangle Park, NC), Lucent Technologies (Murray Hill, NJ), Optical Micro-Machines (San Diego, CA), Texas Instruments, and Xros. Lucent has already demonstrated a 256 x 256-switch matrix on a one-inch-square chip and, no doubt, there are even more-sizable switches under development that Lucent will not talk about. Micromirrors probably have the technological edge for the moment, say industry observers.
Manufacturing holds the keys
However, micromirrors are not the only technology option in the all-optical switching arena. Coming up fast are systems based on liquid-crystal switches from Corning Incorporated (Corning, NY), Chorum Technologies (Richardson, TX), and SpectraSwitch (Santa Rosa, CA). While most of the smart money seems to be on micromirrors for the near future, other technologies may well hold out more hope in terms of the key factors of scalability and manufacturability. The latter attribute may indeed turn out to be much more important in the long run. Manufacturing is an area where the well-established big guys may have a decided advantage over the technology-rich startups who lack the necessary manufacturing know-how.
Clavenna concludes, "At the dawn of this optical network revolution, opportunities for existing optical switch manufacturers and startups are plentiful and should create a robust, competitive market for the foreseeable future." That's a pretty modest understatement, I'd say. What the dot.coms have been to the late 1990s, optical networking companies will be to this decade with one major, major difference: there's real money to be made in selling optical switching systems and components.