Startups developing extremely fast optical switches have enjoyed a renewed belief that the days of exotic input/output standards, including InfiniBand and FibreChannnel, are numbered, and that the future of high-speed telecommunications lies in the 30-year-old Ethernet standard. As such, they have eagerly anticipated big spending as companies implement new high-speed systems.
But a couple of developments reported in the last week in telecom industry news specialist LightReading.com could cause concern among investors in companies, including Woven Systems Inc. and Plato Networks Inc., that have recently raised money anticipating stepped up spending in the sector. On Sept 16, LightReading reported that an analyst had tracked spending and concluded that
Google Inc. recently tested a high-speed transmission system using Ethernet switches it developed in-house. Then on Nov. 16, the publication reported that
Verizon Communications Inc. tested another system using old equipment from Alcatel-Lucent.
Regarding the Google development, analyst Andrew Schmitt of Nyquist Capital said it could be bad news for startups. "This decision by Google, while small in terms of units purchased, is enormous in terms of the disruptive impact it should have on 10-GigE switching equipment providers and their component supply chains," he concluded.
Similarly, LightReading reported that Verizon Communications Inc. spent several months scouting potential vendors for equipment to use in its high-speed test, before selecting an old product developed at Lucent before the company merged with Alcatel. Not only did Verizon bypass products developed by new entrants in the sector, it opted to use a piece of equipment developed that Lucent had almost dropped prior to its merger with Alcatel.
- Clifford CarlsenSee Nov. 16 story from LightReading.com
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