Sycamore's Mighty Shadow
Photonics over fiber is the future of networking
technology. And Sycamore Networks has become the
company to beat.
By Om Malik
opmalik@opmalik.com
Many CEOs cite names such as Peter Drucker
and books such as In Search of Excellence and
The Practice of Management as guideposts for
their managerial style. But few forward-thinking
executives would admit to using a 5,000-year-old
sacred text to assist them in day-to-day
managerial decisions.
Gururaj "Desh" Deshpande, co-founder of current
Wall Street darling Sycamore Networks,
however, is not your average corporate leader.
Pulling such maxims as "If it can be done, it will be
done" and "All one has to do is work towards the
target and forget about the fruits of labor" from the
Bhagavad-Gita ? or Song of the Blessed One ?
an ancient Indian philosophy text, Deshpande has
almost single-handedly helped change the way
networks route data, and the speed with which it's
done. In the process, he has become a guru of
sorts to scores of companies and investors eager
to divine some of his insight.
This became apparent recently in a small Manhattan hotel conference room,
where Deshpande preached his optical networking gospel. Surrounded by
fast-talking telecommunications analysts, he silenced the room the instant his
talk began, with many analysts leaning forward so as not to miss a word. "We
are trying to change the way optical networks are built and function," he
enthused. How do he and Sycamore plan to do this? Photonics.
Next-generation networks
Photonics is becoming the bedrock of the next generation of networks that use
light waves (or photons) instead of electrons to transmit data over the optical
fibers. Optical technology that uses photons is more efficient and much faster
than traditional data-networking technology and has become many a prescient
entrepreneur's latest gold mine. Everyone from Columbia, Md.-based Corvis to
giants such as Nortel Networks are working furiously to develop products that
make optical networks as commonplace as the local area networks that
crisscross corporate America.
In order to understand what Deshpande and his team are doing, it is vital to
understand the architecture of the public fiber network. The basic public
network consists of three primary components ? fiber optic cable that
provides raw capacity; dense wave division multiplexing (DWDM), which
multiplies the raw capacity of a specific fiber by dividing a fiber strand into
multiple wavelengths (see "Breaking Bottlenecks," March '99, p94); and
SONET/SDH transmission equipment, which converts data traffic from an
electrical signal to an optical signal for transport over the fiber network and
provides the traffic monitoring and management services. In this architecture,
the fiber and DWDM equipment provide nothing more than a physical
transmission medium ? the "network plumbing." The ability to manage voice
traffic, dubbed "intelligence of the network" by Deshpande, resides in the
electrical domain and is provided by the SONET/SDH layer of equipment.
While this was a great architecture for a voice-dominated world, SONET has
some shortcomings in today's data-centric world. Unlike voice traffic, which is
generally characterized by slow growth and stable demand, data traffic is
characterized by rapid growth and unpredictable demand. Data networks must
be capable of being deployed cost-effectively and expanded quickly.
Under the current architecture, carriers must turn photons into electrons and
then back to photons to switch from one router to another, or to boost the
signal when it weakens over distance. These converters can cost upwards of
$50,000 each.
This is the market Sycamore attacks. Eighteen
months ago when starting Sycamore, Deshpande
and co-founders Eric Swanson and Rick Barry
wanted to build equipment that helps data flow
onto optical cables and manages that flow ? the
type of hardware service providers such as
Williams Communications and Enron would
spend millions of dollars buying.
Deshpande's thesis was that the demand for network capacity would explode
and service providers would need to deliver the bandwidth capacity at the flick
of a switch. In order to achieve this, Deshpande realized that Sycamore's
product would need specialized software or "intelligence."
"Right now, if you need to boost bandwidth capacity, you need to call up your
service provider and it takes almost six months to add more capacity," says
Deshpande. His target is to cut that time to six minutes by end of this year, then
to six seconds, and then make it real time. And it will all happen, he argues, in
the software.
This epiphany has made Sycamore a leader in optical networking, and has
helped the company reach a $28 billion market capitalization on $29 million in
sales. Surprisingly, the company has outpaced better-equipped rivals such as
Lucent Technologies and Nortel in a market that is estimated to balloon from
$9 billion last year to $40 billion in 2003, according to RHK, a San
Francisco-based market research firm.
Five products in 10 months
While most of its rivals are trying to make optical networking hardware beefier,
Sycamore started out with an architecture that can be scaled up for use in the
backbone networks. Using Sycamore's proprietary software, the same basic
architecture can be scaled down to be used in metropolitan fiber optic
networks. Sycamore also makes an optical switch that is used for optical
routing and network control, a transport node that helps connect the optical
networks with other type of networks, and network management software to
maintain and run the optical networks.
The company's sharp focus has helped Sycamore get off the ground at a rapid
clip. Eighteen months after founding the company, Deshpande and CEO Dan
Smith shipped their first product. No other networking company ? Cascade
Communications, Ciena, or even Cisco Systems ? has gotten out of the chute
so fast.
"Sycamore dove into the metropolitan space first and then expanded into the
longer haul space," says Frank Dzubeck, president of Communications
Network Architects. "They have announced and shipped five products in 10
months. In the optical space, that's unheard of."
"If you look at all the announcements in the optical-networking space, there are
not many who have delivered on the optical networking architecture," says
Matthew Bross, chief technology officer of Williams Communications. "The
others may have good ideas; they do not have any products."
Om Malik (opmalik@opmalik.com) is a writer based in New York. |
