Force 10(G) Infinera

One of the great joys of writing a blog, is that you can keep up with the companies you have written in the past. Infinera, a Sunnyvale, Calif.- based photonic chip maker is one of them. Back in the day, I wrote about the company’s seemingly crazy bet to develop photonic circuits based on Indium Phosphide.

Their idea of developing relatively cheaper integrated photonic circuits that replaced big expensive single-purpose optical boxes was met with healthy skepticism. It was a hard sell – especially since we were in a near complete telecom meltdown and not a day passed without news of some company going under. Given the track record of the founders, Jagdeep Singh, Drew Perkins,and David Welch, I was able to convince my editors at the old Red Herring that their quest was worthy of a cover story, The Light Brigade.

Beleaguered network carriers like Level 3 Communications and bankrupt Global Crossing could build networks for much less, and run them more efficiently and at a lower cost, maybe even profitably.

Singh & Company have not disappointed. According to market research released by The Dell’Oro Group, Infinera has now 20% of the total market for 10 gigabit long-haul optical systems, barely a year after they started shipping their first product, Infinera DTN, which is based on that crazy photonic chip I originally wrote about.

According to Dell Oro, Infinera shipped 1449 wavelengths of 10 gigabit long-haul DTN systems to customers in the third quarter, for a 20% share of the total worldwide market of 7300 wavelengths. Nortel ranked second in the market with a share of 17%. Alcatel and Siemens tied for third, each with 9%. If you add metro networks to the mix, Infinera is ranked #2 with 15% market share. Among company’s customers are Level 3, FLAG Telecom, CityNet and a whole slew of carriers, mostly small.

Taking this opportunity, I caught up with Singh, who is the president and the CEO of Infinera. 201c;It has been the inverse of the perfect storm for us,201d; he says. While rest of the industry was shrinking and cutting back its investments in DWDM-related research, Infinera was boosting its spending. Now with carriers opening their wallets, and demand for bandwidth rising due to increased sales of broadband connections and other IP-related services, Infinera finds itself in an enviable position of being at the right place at the right time with the right technology. “The market as a whole is seeing an uptick,” says Singh. (The recent stabilization over at JDS Uniphase is a good testament to that.)

Their mantra of cheaper, faster, better and easier is resonating with the carriers who are willing to overlook the fact that Infinera is a tiny tot compared to its rivals. Jim Crowe, CEO of Level 3, and one of the first large carriers to buy Infinera2019;s products told his shareholders earlier this year that this new gear was helping him save as much as 70% in costs. (Infinera replaced Nortel at Level 3.) To that, Singh says, “We are just riding the Moore’s Law. We believe that photonic integration is the only technology that can allow service providers to scale their networks economically to cope with Internet traffic growth.”

Lets hope they keep riding that wave, at least for the sake of venture capitalists – a virtual who’s who of Sand Hill Road – who have pumped in over $215 million into the company. So what’s next? Singh, like others in the industry is betting that IPTV will provide the zip his company needs to get to the next level.