Time to reread a few things from the archives on short haul optics....
Intel's Optical Attack Makes Waves
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Warning shot, wakeup call, or starting gun? However you want to assess the sound of Intel Corp.'s (Nasdaq: INTC - message board) recent acquisition of three optical components companies (see Intel's 10-Gig Shopping Spree ), it's clear that the world's largest chipmaker isn't quietly standing on the optical sidelines anymore.
Already the optical component industry's biggest single investor (through its Intel Capital arm), Intel is now planning to take advantage of market conditions to bring more technology in-house, part of the company's planned expansion into the fast-growing communications IC market.
"We have capital to spend, and now's a great time to invest and acquire," says Mike Ricci, vice president and general manager of the optical products group at Intel. "We've obviously not stopped. You can expect more acquisitions."
However, Intel's aggressive acquisition plans could cause some turmoil amongst its expansive optical investment portfolio, as those companies may now find themselves competing with one of their strategic investors. And at least one competing chip vendor says Intel's stepped-up acquisition strategy might make Intel portfolio companies suspect partners, which could lessen Intel's value as an investor.
One Intel portfolio company, Digital Optics Corp., is already rethinking the value of having Intel as an investor. "When Intel invested in us two-and-a-half years ago, we saw them as a strategic partner," says Kevin Drehmer, president of the Charlotte, N.C.-based Digital Optics Corp., which manufactures wafer-based optical components and subsystems. "If I knew then what I know today, would I do the same thing? It's hard to say."
According to Intel Capital's Website, the company has no fewer than 28 investments in optical startups, and industry sources say there are several more that the company has yet to disclose. Even as other venture capitalist firms slow down optical investments, Intel is keeping up its pace, participating in six funding rounds this year alone.
"They're very aggressive, and I think you'll end up seeing them buy more companies, especially in the next quarter or two," says Steve Krausz, a general partner at U.S. Venture Partners, which has partnered with Intel on several optical investments. "They [Intel] have been around long enough to know how not to overpay."
While the Intel brand name and the company's manufacturing smarts are enticing to many startups, the unanswered question about Intel's true intentions could make business tougher for some of them, according to Andrew Gottlieb, vice president of marketing at MMC Networks Inc. (Nasdaq: MMCN - message board), the network-processor subsidiary (see AMCC Introduces Network Processors ) of chipmaker Applied Micro Circuits Corp. (AMCC) (Nasdaq: AMCC - message board).
"The acquisitions make us leery of partnering with people who have Intel as an investor," says Gottlieb, who says that Intel behaves differently than other communications IC vendors.
"If, say, Vitesse Semiconductor Corp. [Nasdaq: VTSS] were to buy a startup, we're still likely to work with them," Gottlieb says. "Intel, however, shuts it off completely -- it's the whole proprietary Wintel thing. So you just don't know what will happen to a company, should Intel decide to buy them."
Intel's Ricci, however, says an Intel investment is not necessarily an indication of a desire to partner with, or acquire, a startup.
"I don't think you can map [acquisitions] to six different things we may have in the portfolio," Ricci says. "The equity position we take doesn't always map one-to-one with our acquisition plans."
While Intel's not afraid to invest in companies in the same technological space, or even acquire companies that may compete with members of its portfolio, several portfolio firms say they're satisfied with Intel's integrity as an investor.
"Intel has been very professional, with a high level of integrity," says Andy Zhou, president and CEO of Optoplex, a startup manufacturer of passive components for the DWDM (dense wavelength-division multiplexing) market. Though Zhou says Intel's stepped-up acquisition pace has him a bit worried, he doesn't think the company will become a direct competitor to Optoplex.
"I think they [Intel] are more interested in the active components space," Zhou says. "Things like VCSELs [vertical cavity surface-emitting lasers] and indium phosphide chips should be in Intel's backyard."
Brian Peters, president of CWDM (coarse wavelength-division multiplexing) components startup Blaze Network Products Inc., says he's confident Intel the investor won't pass on his company's secrets to other, competing portfolio firms.
"I know that some of the Intel VCs know my costs, but their personal integrity appears high enough that they wouldn't disclose such information," Peters says.
Intel's Ricci says the company generally avoids taking active board seats in its investment companies, to lessen the chance for conflicts of interest. But he says Intel will continue to fund -- and acquire -- companies in similar spaces.
"When you're looking at 30 companies, there's a risk for overlap," Intel's Ricci says. "We try to avoid it, but it can happen."
Though Ricci didn't break out the percentage of Intel's total business that optical component products represent, he did say that it's easy to gauge Intel's interest in the overall market.
"It's pretty simple math, when you figure the [optical components] space is growing at 30 to 50 percent, even in the current market," Ricci says. "We still see a $50 billion components market by 2004."
That Intel plans to participate heavily in that market should come as no surprise to anyone involved -- even its investment partners.
"Anybody standing on the sidelines, or in the game, with Intel, had to wonder that they were probably not just in this to invest," says Digital Optics' Drehmer. "You had to think they were interested in the playing field."
-- Paul Kapustka, Editor at Large, Light Reading lightreading.com
I think it's very neat how they can put something like 20,000vscels on a 3-4 in wafer, or make them in a tiny array with wavelengths 25 nm apart! How do they do that?
Blaze site....
blazenp.com
One of their pr pieces...
BLAZE DELIVERS SMALLEST PLUGGABLE 10 GB TRANSCEIVER - THE AFTERBURNER-XGSX
DUBLIN, CA - May 7, 2001 - Blaze Network Products Inc., an optical networking subsystem company, today announced the Afterburner-XGSX, the smallest pluggable 10 Gigabit transceiver in the industry. Utilizing coarse wavelength division multiplexing (CWDM) technology, the device is optimized for short reach multimode fiber applications within the networking infrastructure. The integration of CWDM and 850nm-based VCSEL sources provides the best low power and cost solution for the 10 gigabit enterprise market.
The Afterburner-XGSX transceiver is a "Y" axis pluggable device that is approximately ½ the size of standard 10Gb/s transponders and nearly 1/3 smaller than the "Z" axis pluggable announced by competitors last month.
"Customers have been pushing the transceiver industry for years for higher port densities to support the increased numbers of links on the network. While the initial implementations of 10 Gigabit Ethernet will not require a high number of ports per blade, they will in the near future," said Kirk Bovill, director of product marketing for Blaze, "The days of the one and two ports per blade SONET boxes are numbered. With the Ethernet players moving into the traditional transport space, the traditional transponder guys have had to scramble to come up with designs that are less 'SCUD' like in size and cost."
The initial pricing of the product is well below $800 for modest volumes. The product shipments will begin in the next few weeks.
"We've been taking evaluation orders since late last year. We started to ship product in mid-March. The fact that our device is a straight XAUI interface, enables the gear makers to quickly spin board designs since they don't have to wait for the SERDES chips needed to implement a serial solution. There is an inherit time to market advantage with our CWDM-based product line," said Jarrett Jern, product manager of the Blaze Afterburner solution.
The Afterburner product line from Blaze integrates 850nm-based VCSEL optics and CWDM packaging in its optics modules. The scaling capabilities of CWDM-based devices provide the optimal bandwidth enabler for LAN-centric optical links. Blaze currently has product on the market to support 1 and 10 gigabit applications. In the near future, Blaze will be showing optical modules that transmit in the 40 and 100 gigabit ranges.
"We are positioned as the optical solutions provider to the networking industry. Our focus is to become the 'OSP' to the LAN and access markets with our CWDM-based products as bandwidth requirements scale," added Brian Peters, CEO and founder of Blaze.
INTC page on blaze...
intel.com
For Premises Network OEMs, Blaze develops and manufactures next-generation, WDM subsystems. Unlike transceiver suppliers, Blaze delivers mass-customized, turnkey interconnect products that are embedded inside the OEM's system. Blaze's current technology is scalable from 4 to 32 channels, with each channel carrying up to 10Gbps.
Blaze has board-level transceivers capable of 4 to 8 optical channels each carrying 100Mbps to 3.125Gbps: Afterburner is a GBIC that expends Gigabit Ethernet to 2Km over MMF; Flamethrower is a 10 Gigabit Ethernet product for 300m over MMF. The company will soon deliver optical backplane interconnects and multi-chip modules.
Brian Peters, CEO
Brian Peters, CEO and Founder of Blaze, was formerly an Operations consultant with PRTM where he specialized in implementing high-performance supply chains. Before that, he ran several photonics and electronics manufacturing operations. Brian received his BS in Mechanical Eng. And Materials Science from UC Davis and his MBA from UC Berkeley |
