Luxcore's 'second wind' makes competitors breathe easier

TRENDS

By ROBERT PEASE

The competitive playing field got a little less congested in July for all-optical crossconnect vendors. That was good news. At the same time, wavelength conversion technology-a critical piece of the all-optical puzzle that had eluded many of those same crossconnect vendors-suddenly became available. That was even better news.

Luxcore Networks (Atlanta), a 1999 startup promoting an integrated switching/transmission ap proach to the all-optical network, shook up the market by announcing strategic plans to shift the company's focus from systems for carriers to subsystems for manufacturers. In essence, the company's switch competitors now become potential customers-and some are very interested in what Luxcore has to offer.

"Luxcore caused a stir in the industry this year by being the first vendor to promise wavelength conversion, one of the 'holy grails' of all-optical networking," says Sterling Perrin, a research analyst for IDC. "Optical conversion solves the problem of wavelength blocking in all-optical crossconnects and eliminates hundreds of costly OEO [optical-electrical-optical] transponders-about $50,000 each-required for this function today."

According to Perrin, the constrained capital market within the optical sector of the industry prompted Luxcore's action. Although the company itself may be reluctant to acknowledge an impending "sink or swim" situation, the fact is that less venture money is required for a subsystems vendor. The decision to shift focus followed the realization that second-round funding as a systems vendor would probably not be forthcoming. But the upside is a strong chance for Luxcore to rebound as a leader in the optical subsystems space.

While financial woes may have precipitated the results, Luxcore founder, chairman, and CEO Gerald Ramdeen, also cites interest in the company's proprietary core technology as another catalyst in shifting strategies. Established systems equipment manufacturers have regularly inquired about incorporating Luxcore's semiconductor waveguide optical regenerative device (SWORD) technology into their systems. That realization, coupled with the financial climate, started months of deliberation among Luxcore's management, ultimately leading to July's decision.

"We decided Luxcore must reposition itself in the supply chain to take advantage of this immediate demand," says Ramdeen. "This pivot in strategy changed our target customer focus from the carriers to enabling those who are best positioned with customer market share and customer visibility today-the established systems vendors."

Although second-round funding still had not been secured at press time, the company's position may be somewhat less precarious as other benefits come to light. For example, repositioning itself as a technology supplier to larger systems manufacturers provides a clear way to get Luxcore's technology into the market much faster. The target customer base also increases, says Ramdeen, since there are more systems vendors with enormous purchasing capabilities than there are large established carriers.

"By enabling and supplying our systems customers with turnkey core technologies in the form of integrated subsystems on single line cards, we allow our systems customers to better focus on larger systems architecture and software engineering issues," says Ramdeen. "The end result for our systems customers is quicker time-to-market, more competitive pricing for their systems products, and an advanced technology platform for future evolution. Luxcore's advantage is a leading market share in the optical subsystems space, lower capital expenditures, increased revenues, higher profit margins, and increased returns on investment."

IDC's Perrin agrees that optical-crossconnect vendors are clearly interested in Luxcore's move into the subsystem space and are watching this transition closely. Significant vendor interest could translate into revenue for Luxcore, although the risks at this stage remain considerable.

"The change in strategy does not guarantee a second round of funding, and the company must still prove it can execute on a strategy that exists only on paper," says Perrin. "Systems vendors will do well to at least open up the dialogue with this new potential partner."

Even with a somewhat shaky future, Luxcore believes the interest-and the funding-is out there for its technology. SWORD technology is incorporated in Luxcore's all-optical wavelength-converter (AWC) optical transponder. The AWC displaces the need for costly bit-rate and protocol-specific OEO trans ponders and transceiver modules currently required at each input and output port of an optical switch.

SWORD uses a proprietary combination of both passive waveguides and active optical waveguides-in the form of semiconductor optical amplifiers (SOAs)-on a single semiconductor-layered chip to exploit various phenomena associated with optical linearities. One such phenomenon is cross-phase modulation, used to enable all-optical wavelength conversion.

Simply stated, a single-channel wavelength enters the device and the modulated optical signal format is copied onto an output wavelength at a specific frequency. The output frequency is largely a product of the interaction between the input frequency and a given probe input wavelength. The output frequency also undergoes optical 2R generation, basically reamplifying and reshaping the pulse of the output wavelength. The given probe input wavelength is generated by a programmable source input such as a tunable laser. These processes are performed instantaneously without ever converting the light to an electrical format.

In the future, Luxcore plans to supply building blocks for constructing, de ploying, and managing next-generation all-optical networks. These include AWCs, ultra-fast optical switches, tunable reconfigurable optical add/drop multiplexers, and 3R optical regeneration subsystems-all on single line cards with common industry-standard integrated software control-plane interfaces.

For now, however, Luxcore is working with several systems vendors and at least one major carrier in reviewing its AWC product specifications and evaluating the technology. The company demonstrated the alpha version of its core SWORD technology in the LambdaXchange optical router unveiled and demonstrated at the Optical Fiber Conference (OFC) in Anaheim, CA, last March.

"We are going through the beta spin cycle and expect to ship beta evaluation units by the end of 2001 for customer beta trails in first quarter 2002," says Ramdeen. "General availability of our all-optical wavelength-converter optical transponder subsystem is scheduled for second quarter 2002. With the announcement of our strategic shift to a subsystem provider, new-venture investor interest has risen significantly."

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