Playing well with others
As optical fibre moves closer to the customer, the challenges and the competition escalate. Equipment vendors that can form partnerships with component or fiber makers are at an advantage.
Quantum Bridge Communications makes optical equipment for the edge, where businesses are connected to the network core. Last month, it announced a partnership with Corning whereby they become each other's preferred vendors. "We help our customers get access to Corning fiber, and Corning helps its customers who want optical to reach their business to get access to our equipment," says Jeff Gwynne, vice president of marketing at Quantum Bridge. "We look at partnerships to provide fuller solutions."
Quantum Bridge also allies with companies such as Marconi and Nortel so it can focus on innovation and let others worry about providing interfaces with different technologies and protocols, Gwynne says.
Analysts point to another reason why they think the optical market will soar - or at least outperform the entire high-tech sector. Salomon Smith Barney expects the shared-storage business to grow to $40 billion per year by 2003. That's increasingly a metro-area business, because the storage centres need to be close to large businesses. And with the bandwidth those centres demand, the only conduit that can deliver it is, of course, optic fibre.
The optical space isn't as hot as it once was, but there will be continued exploding demand for bandwidth, "and that's not going away," says John Kane, CEO of Telseon, which lights fibre in the metro area and sells it to service providers. "The cheapest and easiest way to deliver that is over optical networks."
Telseon last month won $175 million in financing from investors sold on its business plan. Investors were just as sold on Yipes Communications, which plays in the same space, but sells services directly to businesses. Investors gave Yipes $200 million last month. Both companies completed fibre-optic rings around 20 U.S. cities by the end of last year.
"Money is sitting on the sidelines until they understand where the bottom of the market is," Kane says. "Money will then start to flow back into the market, albeit cautiously."
To survive as an equipment vendor today, "don't get involved in religious wars," Gwynne suggests.
He urges vendors to provide solutions for big incumbent carriers, new competitors, cable television and those that run various protocols and technologies. "You can't say, 'I'm going to be an IP bigot, or an ATM bigot,'" he says. "You have to provide equipment that guarantees their investment in any of that. Listen to your quality customers. Most of what they want is going to be widely commercially applicable. Give them total solutions and love and care. That's what's going to separate winners from losers."
And one more thing: "Run like hell," he says. "Speed is life. We have a saying around here: 'The guys that are quicker and most agile will win the race.'"
