SAN MATEO, Calif. — It's been two and a half years since Nortel Networks bought Xros Inc., kicking off a frenzy for all-optical switching. At least two dozen companies targeted the network core with photonic switches, most based on microelectromechanical systems (MEMS). Now Nortel has put Xros' 1,152-port switch project — seen as a milestone when it was announced in 2000 — on ice.
As core-network spending has dried up, all-optical switching has seen casualties. Even 256-port switches are being put on hold by companies such as Calient Networks. But supporters insist the technology remains viable.
"The ultimate end-use customer is still looking at this as the next-generation technology," said Marlene Bourne, an analyst who tracks MEMS for Cahners In-Stat. "It's not that the interest level has diminished. It's just that nobody's buying right now."
Every core-networking technology faces that problem, but it might be particularly frustrating for the MEMS camp, which had finally cleared some big perceptual hurdles. First, proponents had to quell fears about the durability and cost of MEMS parts. Then they had to prove that the technology was manufacturable in volume. Those concerns "have really been put to rest," Bourne said, but now all-optical switches have to battle the economy.
A matter of perception
Vendors everywhere are trying to emphasize how their products can cut costs for service providers, and the all-optical camp is no exception. Luckily, all-optical switching has always had some cost advantages, such as the absence of the transponders needed to power conventional OEO (optical-electrical-optical) switches. Vendors of photonic switches are now emphasizing such benefits "rather than sexy applications like wavelengths-on-demand," said Charles Corbalis, chief executive officer of systems vendor Calient (San Jose, Calif.).
Even so, some service providers still perceive all-optical switching as expensive, Corbalis said. That perception triggered Calient to lower prices beginning in June, to $5,000 per port or $175,000 for a 32-port switch. Prices for forthcoming 128-port switches could be half those of corresponding OEO switches with OC-48 (2.5-Gbit/second) ports and "perhaps one-eighth or one-tenth of the price on 10 Gig," Corbalis said.
As for the price of the MEMS element, component vendor Optical Micro Machines Inc. has seen prices fall to $1,000 per port, with $500 per port likely by mid-2003, said Conrad Burke, the company's senior vice president of marketing. Burke said the price drop is due to the normal commoditization of technology and is not an attempt to spur sales. He believes all-optical switching is being stalled less by the economy than by the usual product acceptance curve.
The customer base might be shifting as well. Calient officials said they're seeing interest from the incumbent local-exchange carriers (ILECs), which often need to create connections between arbitrary points on short notice. Interexchange carriers were the initial targets for all-optical switching but were interested only in evaluating the technology, whereas ILECs seem serious about using it relatively soon, according to Calient.
"They are driving us toward field trials and emphasizing operational issues," said Mike Matthys, Calient's vice president of marketing.
Outlasting the drought
But before all-optical switching has its day, vendors will have to outlast the drought in telecom spending. All-optical switching may needed some trimming, but the economy might overdo it.
"I always felt competitive pressures would do a lot to weed out people in this segment. But at this point, market pressures are having more of an impact. There are some good companies with good technologies that could be left by the wayside, and that would be disappointing," In-Stat's Bourne said.
