Finisar launches into networking systems arena with optical edge switch

Finisar Corp. (Sunnyvale, CA) has extended its networking product family with the new Opticity Service Provisioning Platform optical edge switch. Finisar already has well established product lines in the Gigabit Ethernet and Fibre Channel component space, as well the test equipment market, and with Opticity the company is moving into the competitive networking systems arena.

Finisar Corp. (Sunnyvale, CA) has extended its networking product family with the new Opticity Service Provisioning Platform (SPP), an optical edge switch that allows carriers to deliver high-capacity data services over metropolitan area networks. Finisar already has well established product lines in the Gigabit Ethernet and Fibre Channel component space, as well as a successful entrance into the test equipment market, and with Opticity the company is moving into the competitive networking systems and storage arena. "The market for the installed base of storage is growing at more than 100% a year," says Jerry Rawls, Finisar's CEO, "and the switches that are being sold are growing at more than 100% a year." Finisar is the first company to ship a data-centric optical edge switch, and has already delivered the product to its first customer.

The Opticity SPP chassis is installed by service providers in a central office, point of presence, cable TV headend, or customer premises. It supports switched data services for Gigabit Ethernet and Fibre Channel over fiber rings or point-to-point connections, and can weave Gigabit Ethernet and Fibre Channel data channels together on a single fiber using wavelength-division multiplexing.

The switch uses integral layer-two and layer-three Gigabit Ethernet and Fibre Channel switching to deliver gigabit throughput, as well as to ensure quality of service for delay-sensitive applications like voice and video. When combined with standards-based local area network switches, the Opticity switch allows 10/100-Mbit/sec access at the same price as Frame Relay or Digital Subscriber Line service, says the company.

Finisar's initial customer, Storage Networks Inc. (Waltham, MA), helps to establish market demand for Finisar's product, says Current Analysis analyst Chris Nicoll, and also identifies the target market for the Opticity SPP in the form of Gigabit Ethernet and Fibre Channel connectivity. "Gigabit Ethernet demand is high," continues Nicoll, "and is likely to be the basis for many future service offerings--much the way that T1 is used for a variety of voice and data purposes today."

The Opticity SPP chassis, wavelength-division multiplexer, and Gigabit Ethernet and Fibre Channel interface modules are shipping now. Pricing starts at $48,000, which Nicoll believes may be accepted by the storage area market but could be too high for service providers to accommodate. He also acknowledges the Opticity's lack of test features: "Given the strong history the company has in the test market, we expected that Finisar would have built into the Opticity SPP a broad range of performance monitoring and service-level management capabilities. We believe the company missed an opportunity to create a definite competitive differentiator by not including more of these capabilities on the Opticity SPP."

Nicoll also questions Finisar's ability to focus on several different markets, since the company does not have huge financial resources. Finisar's reputation, however, may have enough clout to help it successfully enter into the networking platform market anyway. The company raised a significant amount of capital in a highly successful initial public offering (IPO) in November, which Rawls sees as an advantage. "Since the IPO, people view the company in a different light. Before, were profitable every year for 11 years, but only had $4 or $5 million in the bank. Now we can point to that $150 million, and it gives the other companies more confidence in us," he asserts.

The 12-year-old company also offers stability that may lure customers away from optical startups. Finisar has been profitable since its founding, and has doubled revenues each year since. Says Rawls, "Our compound annual growth rate for the last five years has been 94% a year, and for the first half of this year, our sales were up 111% over last year...Since our IPO, we've had a stream of big companies visiting us to evaluate us and qualify us as a supplier, and so far we have not been rejected-we have either been selected and qualified, or the company is still in the selection process."

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