Companies evolve to boost 2008 success

Th 274316

With market dynamics constantly, well, dynamic, optical communications technology companies must evolve to keep pace. Two companies, one at the systems level, the other at the components level, have recently transitioned their companies to improve their chances for success in 2008.

On the systems side, ADVA Optical Networking (www.advaoptical.com) capped a full year of management restructuring this past November with the hiring of Ron Martin as chief marketing and strategy officer and president of the company�s optical networking North American subsidiaries. Martin was the fourth executive to join the company�s executive team in 2007, following the promotion of Christoph Glingener to chief technology officer in January and the addition of Christian Unterberger as chief sales officer in September and Jaswir Singh as chief financial officer shortly before Martin�s arrival.

Chief executive officer and cofounder Brian Protiva explains that the management overhaul had two purposes. First, while ADVA Optical Networking had been growing steadily for several years, �in 2007 we basically had a few hiccups on execution,� Protiva says. He points to the integration of assets acquired from Covaro and Movaz Networks, product consolidations, and the completion of internal IT initiatives as challenges the company faced.

�I had expected a lot from the organization. And I think we didn�t live up to all those challenges,� he says. �Therefore, moving in 2007 we realized that we do need to continue to build [executive] experience.�

The second reason for the change was to target this newfound experience toward repeating the European success of the company�s WDM and �optical+Ethernet� product lines in North America. �If you look at ADVA in Europe, we sell into Tier 1s, Tier 2s, big enterprises, Tier 3s, in pretty much every market in Europe successfully,� Protiva explains, laying out the goal for North America. The company has established �small little footprints� with the RBOCs as well as U.S. multiple-systems operators (MSOs) and will derive about 30% of its business from North America in 2007, Protiva estimates.

�But we want to do more than being exposed. We want to become a dominant supplier, like an Adtran, to some of these top carriers,� Protiva says. �But as we say that, we�re driving Tier 2s and Tier 3s and expanding our business opportunity with them as well as certain key enterprises [in North America].�

One tool at the company�s disposal is an existing OEM arrangement with Fujitsu Network Communications (FNC), which echoes a similar agreement with Nokia Siemens Networks that has borne fruit in Europe. �Ron Martin was one of the individuals who ran FNC back a few years ago. So we expect that to strengthen our relationships within FNC, and we are going to go to market with them and have some critical account opportunities with them,� Protiva says.

Protiva believes the company has an attractive product line for U.S. carriers. �We�re moving to two common hardware architectures, with one common software framework,� he explains. �Both of our hardware architectures are North American product architectures. So they have TL1 state machines in the inside of them; it�s not tacked on top. These are global platforms with American technology and American desires, needs, and specifications planned into them. So we�re very capable of servicing any carrier in the United States.�

The problem with bringing in new people, of course, is that they must work with�and, in some cases, replace�employees who have contributed to the company�s success. Martin�s hiring in particular represented a watershed for ADVA Optical Networking, as he replaced founding president of ADVA Optical Networking North America Brian McCann. Noting that McCann has been �a friend 15 years and a business colleague since a decade,� Protiva says that when it came to hiring Martin, �I�ve been very open and transparent with him.�

McCann was involved in the process of bring Martin onboard, Protiva reveals, and says that McCann has agreed to take a position as senior vice president of corporate marketing and strategy, reporting to Martin. �Will I remain in this position indefinitely?� asks Protiva, putting himself in McCann�s shoes. �No.� McCann currently is helping Martin with his transition into the company; Protiva says he will meet with McCann in the middle of this year to discuss what happens next.

Meanwhile, Protiva believes the right senior management resources are currently in place for ADVA Optical Networking to achieve its expansionist goals. �We�re a rock solid team and we�re going forward. In 12 months if we�re not performing well, then it�s me�I�ve got to look at myself and say I�m not performing like we should be performing,� he concludes.

Meanwhile, on the components end of the spectrum, GigOptix (www.gigoptix.com) acquired Helix Semiconductor. The acquisition, announced last month, adds silicon expertise to GigOptix�s existing III-V know-how as well as multichannel chipsets for transceiver applications. Terms of the deal were not disclosed.

The acquisition is part of the company�s strategy to expand both the technology base and product mix GigOptix started with when it changed its name from iTerra and embarked on a new corporate direction this past fall under the direction of new chairman and CEO Avi Katz. (See �iTerra Pushes �Restart� with New Name, New Products,� Lightwave, September 2007, page 31.)

According to Katz and Helix chairman, CEO, and founder Joerg Wieland, the two firms are completely complementary. GigOptix has derived most of its customer base from North America and Europe, for example, while Helix has had success in Asia. GigOptix�s existing product line addressed serial telecom requirements, while Helix�s parallel products saw use most frequently in short-reach data center and other datacom applications. And, as mentioned, the two companies have different materials expertise.

�When you put the technology of both companies together, we are probably the only provider in the market that covers the entire range of drivers and receivers, all the way from the short sub-meter distances for data centers, for example, all the way up to 1,000 km,� Katz asserts.

In particular, Katz and Wieland envision chips that address high-speed parallel optic applications, particularly 4�25-Gbit/sec devices for 100-Gbit/sec transponders. The devices likely will be based on Helix�s 0.13-µm SiGe expertise and should debut this year.

The company also expects to be prepared to address proposed 10�10-Gbit/sec PMDs. Other elements of the combined product line include modulator drivers, laser drivers, and TIAs for telecom, datacom, InfiniBand, and consumer optical systems, from transmission rates of 3.125 to 100 Gbits/sec. The devices will cover all laser technologies, according to GigOptix.

Wieland says the deal makes sense for Helix, given the obstacles it faced in its efforts to expand its product line into such areas as EPON burst TIA/LIA and other TIA receivers.

�In our industry the NRE costs tend to go up while the volume costs go down. And clearly the trend is in favor of bigger organizations and of horizontally integrated organizations where you can really exploit the joint efforts to come up with these high NRE costs,� he explains. �That�s opposed to vertical integration, where we think in the future we might even see vertically integrated companies spin out their semiconductor activities because, even for bigger organizations, these NRE costs become unbearable.�

Helix will operate under the name GigOptix-Helix AG and maintain its facilities in Zurich. Katz says that having a European base of operations will bring company resources close to a major customer base. Most if not all of Helix�s current employees are expected to be retained. This includes Wieland, who will serve as corporate vice president and general manager of the Zurich operations. Th 274316

Stephen Hardy is the editorial director and assoiate publisher of Lightwave.

More in Market Research