Optical fans flock to Opticon
By Phil Harvey and Paul Kapustka
Redherring.com, August 03, 2000
BURLINGAME, CALIFORNIA -- It's not entirely fair to compare this week's Opticon optical networking conference to this year's Republican National Convention, but there are some noteworthy similarities.
Rather than try to fix America's broken political system, the first-ever Opticon event focused on upbeat discussions on how to fix America's broken telecommunications infrastructure. But both events were charged with taking a set of rather dry issues and turning them into stump speeches that caused enthusiastic attendees to rock the room with applause.
Of course, there weren't any issues here that were voted on or indisputably resolved. No, this industry's own twisted special interest groups -- the vendors who finance their customers so they can keep selling them gear -- will take care of that before and after the sessions here.
But why dwell on that bit of politics when there's plenty of loud music, food, glad-handing, and, yes, a program chock full of industry "celebrities," the folks known for turning once-obscure firms into corporations worth billions?
IT'S MY FAULT
Carl Russo, Cisco Systems (Nasdaq: CSCO)'s group vice president of optical networking, kicked off the conference with his Tuesday keynote, a rollicking commercial for how Cisco will integrate its various acquisitions to form a comprehesive optical networking strategy.
Mr. Russo good-naturedly took the blame for the air of mystery surrounding Cisco's plans for the gear it got when it bought Pirelli Optical Systems and Monterey Networks. According to Mr. Russo, Cisco will build on Sonet technology in the metropolitan-area networks but will focus on moving from Sonet rings to fiber-based mesh networks as it builds out to the network's core.
Where Cisco has an advantage, Mr. Russo said, is in its ability to apply its expertise in connecting local-area networks (LANs) to connecting wide-area networks (WANs). And in terms of imagining an interconnected world, Mr. Russo wasn't met with much argument.
Where Cisco will be challenged, though, is in its rather late start to the optical networking space. It will have to wage a tiresome war against Nortel Networks (NYSE: NT), Lucent Technologies (NYSE: LU), and others who are entrenched in the old phone networks and the long-haul optical space.
"We're going to have to run like hell," he admitted, but Mr. Russo assured the crowd that he loves a good fight. He said Cisco's approach of shifting from Sonet technology to mesh networks will favor the company in the long-term, "and this is a long-term struggle."
As it struggles on, Cisco is no doubt in a good position in terms of acquiring what technologies it needs to compete and, as Mr. Russo pointed out, the higher the valuations for new companies are, the better-off Cisco will be compared to others. "The market really separates who can acquire and who can't," he said.
ALL IN AGREEMENT
The lack of conflict was evident at this show in a Tuesday panel focusing on the question of where it makes sense to deploy dense wave division multiplexing (DWDM) gear in metro-area networks. To a man, the four panelists all agreed that metro-area nets were going to get more optical networking gear in the near future, to handle the already-here demand for bandwidth.
Rob Batchellor, vice president of technical marketing for recent Cisco acquisition Qeyton Systems, said that the increasing deployment of digital subscriber line (DSL), cable modem, and other high-speed customer access technologies is putting pressure on metro networks to get faster and bigger.
"The roll-out of high-speed access [technologies] is causing metro transport to be the bottleneck," Mr. Batchellor said.
Mr. Batchellor and his fellow panelists noted that current bandwidth problems at the metro-area level are being solved by installing more fiber -- a tactic that is no secret to anyone who lives on San Francisco's peninsula, where major thoroughfares seem to be under constant siege from road-ripping and fiber-installing crews. But future bandwith and service needs will call for more high-powered optical networking gear in the metro space, a future all the panelists could agree on.
RUN FAST, STARTING NOW
Wednesday morning's keynote by Sycamore Networks (Nasdaq: SCMR) president and CEO Dan Smith was punctuated with tips on how to grow an optical networking company -- even in a market where the larger equipment firms are spending like mad to subsume younger firms.
One key to success, said Mr. Smith, is in running the company as if it were public from day one. This covers seemingly obvious things such as hiring mature managers and securing a huge amount of capital to take products to market.
That helps explain why Sycamore raised $1.5 billion in a secondary public offering just 180 days after it first started selling shares. Equipment trials require tens of millions of dollars, he said.
Then there's the practice of priming the market's pump by offering various financial incentives for customers to use its equipment. Sycamore does use some of its capital on incentives, Mr. Smith said during a question and answer session following his company pitch. "But we won't do a lot of them," he quickly added. "It's important ... but we'll only do it in spots where we believe in our customers' ability to truly make a difference."
And what are some other tricks to building customer loyalty for a young company going public? Letting customers in on your IPO certainly helps. "We gave customers ability to buy shares at our IPO at the IPO price," Mr. Smith admitted. "But that's no different in my view than having Fidelity (or some other mutual fund company) do it."
"It does affect what [Sycamore's customers] think about," he said. "There's no doubt about that."
Perhaps as the game changes from who has the best technology to who can get money, move markets, and influence others, we'll see more parallels between political gatherings and tech industry confabs such as this one. But will we ever see Colin Powell introducing a keynote speaker in the optical business? Stay tuned |
