By MEGHAN FULLER
"A lot of even established vendors in the optical arena know their box very well, but they don't know how their box performs in a network environment."
The optical design software industry has undergone a dramatic shift over the past six to 12 months, precipitated by difficult market conditions. What was once an industry driven by innovation is now an industry driven by pragmatism and optimization. While design software manufacturers must continue to follow technology trends, their customers are now looking for software to help them later in the production process. For component and system manufacturers, the emphasis has shifted from making a product that is fantastic the first time to making a product that is acceptable and competitive every time.
Today, component vendors are looking for software to help with cost and yield optimization, contends Kay Iversen, president and chief technology officer at VPIsystems (Holmdel, NJ), and this was not necessarily true a year or even six months ago. "We were deep in the R&D department, looking at the newest innovations," claims Iversen, "but now we've shifted out of that."
More and more, component vendors are turning to software to help them after the manufacturing process. Component vendors are now using network design software to help them respond to requests for information and requests for proposals. "There is more competition for less business," says Iversen. "A lot of even established vendors in the optical arena know their box very well, but they don't know how their box performs in a network environment." Network design software can help them simulate this environment.
The major trend from a network design perspective is also capital-expenditure-related, claims Alain Cohen, president and chief technology officer at OPNET Technologies Inc. (Washington, DC). Today's carriers and service providers are concerned with "squeezing more value out of the existing network and, much to the chagrin of the equipment manufacturers, reducing the amount of new gear they have to buy," he says. "They would like to light the fewest possible wavelengths while still carrying the traffic they need to carry."
Gail Lalk, president and CEO of Network Design Tools Inc. (NDTI-Eatontown, NJ), which recently merged with fellow design software manufacturer RSoft Inc. (Ossining, NY), has also seen what she calls "a return toward robustness. Post Sept. 11, people are going back and asking, 'Do I know that my network is robust and reliable? If a particular node in my network happens to fail or a series of nodes fail, can I design around that or predict that?'"
Retaining intellectual property has also become critical to component and system vendors alike, which has forced design software companies to create tools that work with and interface to legacy and contemporary databases, says Elizabeth Parsons Morgan, group vice president of marketing and communications at VPIsystems. "We don't want to lose all of the valuable intellectual property that's created with design software," she explains.
The economic crunch has also led to staff reductions, says Lalk, which has led to a less specialized workforce. "A lot of these early-retirement programs and layoffs have caused good knowledge of networks and how to design them to walk out the door. Companies need tools to try to retain that information," she adds.
While their customers may be searching for ways to cut cost and increase revenue, optical design software manufacturers themselves have not been so adversely affected by current market conditions. "We tripled our revenue in the last fiscal year, claims Velko Tzolov, vice president of sales and marketing at Optiwave Corp. (Nepean, Ontario), "and we are probably going to double our revenue this year, even in this difficult market."
Dr. Robert Scarmozzino, co-founder and chief technology officer at Rsoft, contends that his company "will finish out the year with something like a 50% revenue growth. The design software market has really held its own and continues to grow."
Driving this growth, in part, is the fact that most component manufacturers and system designers have begun to focus on their core business, which, in turn, has provided new opportunities for design software vendors. "Companies used to design a lot of in-house software," explains Lalk, "and a lot of companies are now saying, 'Maybe that's not our core business, and we ought to concentrate on our core business and go find help when it comes to doing software.'"
Though only a dozen or so manufacturers worldwide have customer traction, others are sure to follow. To remain competitive, design software manufacturers must begin providing end-to-end, full-service solutions, says Scarmozzino-for several reasons. First, equipment vendors need to understand where they fit in the network hierarchy. "If they are component people, they need to understand how they fit into the systems," he explains. "And if they are equipment vendors, they need to understand how they feed into the networks, or if they are network vendors, they need to understand how the equipment they purchased will perform with respect to their networks."
Having access to a complete software solution also facilities data flow-through, says Iversen. Equipment vendors need to get data from their R&D engineers to their manufacturing floors, then to their field engineers, and eventually even to their customers. Today's vendors are looking for software manufacturers who can provide interoperable software for all stages of the design process. Because the industry is not standardized, vendors cannot use software from multiple vendors.
In the electronic design automation (EDA) industry, "you can have a solution from Cadence and a solution from Synopsis-of course, these companies don't like that another company is used, but it's competitive because there are standards," explains Iversen. "In the optics arena, nothing is standardized, so there is no flow-through. The only flow-through you can have is if you have the complete solution of one vendor."
According to Scarmozzino, the future may hold system-level tools that are tied into specific manufacturers' components and subsystems. It is standard in the EDA industry, for example, to be able to call up specific parts and their specifications for use in system design. The photonic design automation industry has not yet embraced this model, however.
"The manufacturers are still a little bit slow to provide more open specifications on their components," says Scarmozzino, "but we feel that in the long term, it's going to be a competitive advantage for the manufacturers who can work with software vendors to provide this kind of database. The first manufacturers that really get on board with this kind of idea are going to be the ones who win out, because essentially, their products are going to get used in the design analysis of the products that our customers are producing."
OPNET's Cohen predicts that in the distant future, design software decisions might be implemented within some of the packet-switched networks in real time. "The design software would be continuously in the loop," he says, "but of course it's way too early for that."
Though it's really too early to make a lot of predictions about the infant photonic design software market, many in the industry believe it will follow the pattern set by the EDA and mechanical design automation segments, which account for a significant percentage of the total electronic and mechanical device markets.
"Over the next couple of years, companies in the photonic design space will approach the size of some of the giants in the EDA industry, like Cadence, Mentor Graphics, and Synopsis," predicts Optiwave's Tzolov. "We see this field rapidly growing-much faster than the entire fiber-optic industry, because it will grow even on the existing market size."
More and more, companies are starting to view third-party design software as a competitive advantage. "People are still doing things by spreadsheet," says Lalk, "and it's getting very confusing. A lot of different spreadsheets are floating around big companies, as they try to figure out where to make their investments, how to manage their networks. However, there seems to be sort of an inkling that there's a better way to do this."