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November - 2008 - issue > Spotlight: Internet
StrataLight Lighting the Internet Traffic
si Team
Monday, November 3, 2008
The Internet has grown significantly in reach as well as use, and so has the data transferred over it. It has emerged as the platform for a growing number of bandwidth-intensive IP-based applications, including high-speed data, user-generated video and voice over IP. These applications, together with the proliferation of high-speed network access technologies, are causing Internet traffic to grow dramatically.

Cisco Systems estimates that IP traffic will nearly double every two years through 2011. To keep pace with the rapid growth in traffic, service providers are continually expanding network capacity and data transmission speed, while also striving to reduce their transmission cost per bit. And, they would like to do this all on their existing network while being able to roll out additional services without decommissioning working systems.

It is in this effort that StrataLight Communications is playing a major role. It supplies 40 Gbps optical subsystems that are used in the networks of telecommunications service providers and cable operators, quadrupling the existing capacity on their network. StrataLight’s optical technology can retrofit currently deployed systems without any change to existing DWDM systems, fiber, amplifiers, optical filters or other network infrastructure. StrataLight Communications designed its subsystems in a way so that they integrate easily into the optical systems of their customers called OEMs. It is these original equipment manufacturers (OEM) like Ciena, Nokia-Siemens Networks and Xtera, who sell the systems to service providers.

The demand for such spectrally efficient subsystems is on the rise. In fact, as per the estimates of Ovum-RHK, the number of 40 Gbps optical ports will increase from 2,600 in 2006 to approximately 33,600 in 2010. That is a compound annual growth rate of 90 percent.

“In this light, StrataLight seeks to not only address the needs of OEMs and service providers for 40 Gbps network speeds but also to leverage its technological knowhow and experience to strive towards developing subsystems offering speeds of 100 Gbps and beyond,” says Shri Dodani, President and Chief Executive Officer at StrataLight Communications.

The journey

StrataLight Communications was founded in February 2000 at the height of the telecom bubble, through a collaborative effort between a current Stanford University professor and former professors from National Taiwan University and University of California at Berkeley.

Its premise then was to develop a 40 Gbps system that would improve the spectral efficiency and economics of a carrier’s existing optical infrastructure. Incidentally, it took the company four years to complete the development of its first 40 Gbps subsystem. While that basic premise remains true today, what has changed is the speed; the company is now looking at speeds of 100 Gbps and beyond.

From 2004 to 2005, StrataLight worked closely with OEMs and service providers to integrate 40 Gbps technologies, improve network performance and to demonstrate the advantages of 40 Gbps. In 2004, the company commenced shipping its primary product, the OTS-4000 optical terminal subsystem. In the third quarter of 2005, it began shipping a 40 Gbps DWDM embedded module to Cisco. From 2005 to 2006, StrataLight experienced significant revenue growth that was derived from increased sales of its OTS-4000 optical terminal subsystem and the 40 Gbps DWDM embedded modules.

However, it was only when Dodani joined the company in early 2006 that it began seeing sizeable growth. Revenues quadrupled in 2006 and again in 2007 to over $75 million. This, in an industry, that to date is seeing little to no growth.

StrataLight today is a “global company” with offices in California, Oklahoma, Ottawa, Canada and France. Its employee base has grown from 42 people to over 230 now.
Getting on top
Reaching the position StrataLight occupies today hasn’t been easy. Over the years, the company has incorporated certain characteristics into its products that help it win new customers and retain old ones. Dodani expresses some of those characteristics in the following manner:

l Superior Network Performance. Its 40 Gbps products quadruple the capacity of existing service providers’ 10 Gbps DWDM systems, improving the utilization of fiber capacity in the network. The technology enables its OEM customers that manufacture 40 Gbps IP routing and switching systems to provide optical speeds that allow service providers to converge their networks and traffic types onto a single 40 Gbps IP network. Also, the company introduced subsystems that aggregate four 10 Gbps ports into a single 40 Gbps channel, enabling service providers to transition their DWDM channel speeds.

l Compatibility with Existing Channel Spacing. As is evident from the earlier point, “Our 40 Gbps subsystems integrate into existing 10 Gbps systems and function within the industry standard 50 GHz channel spacing,” says Dodani. This is done without significant changes to existing network fiber, amplifiers, optical filters or other infrastructure.

l High Dispersion Tolerance. StrataLight’s products incorporate “chromatic dispersion and polarization mode dispersion compensation technologies that enable service providers to increase capacity from 10 Gbps to 40 Gbps without degradation in data integrity,” notes Dodani.

l Long Reach. Its modulation formats and enhanced forward error correction schemes enable 40 Gbps transmission to match the reach of existing 10 Gbps systems without the need for frequent signal regeneration.

l Interoperability and Integration. “Our subsystem firmware and standards-based interfaces for network management integration, significantly simplify integration for OEM customers. It allows our subsystems to be interoperable with components from other vendors and to integrate into service providers’ networks quickly and easily,” says Dodani.

The company sells its products through OEMs such as Ciena and Nokia-Siemens Networks, which incorporate them into products that they sell to service providers. Leading service providers, including AT&T, Comcast and others have deployed optical systems utilizing StrataLight’s subsystems.

The industry StrataLight operates in, like many others, is maturing yet transitioning. This has given the company an opportunity to, in the words of Dodani, “create a new class of company by horizontalizing the optical system and services business”.

The telecom business is evolving. Product transition has caused a change from vertical integration into an ecosystem of partnerships where companies add value in the product delivery chain based on their core competencies thereby sharing the R&D risk and the market success. This realization influenced management to lay out a certain product focus for the company, to develop the right strategic partnerships and to take a value-added leadership role in their ecosystem to thwart competitors and ease company transitions.

This is the real plus for StrataLight, says Dodani, “Our formula of combining strategic partnerships along with a technologically advance platform and product architecture allows us to address the next technology transition in the network.” StrataLight is committed to providing fully integrated solutions, which lower the development costs and complexity of adopting spectrally efficient transmission technologies. StrataLight will continue to address demand for these products and respond to customer requirements for technologically advanced, cost effective solutions that fit the service providers’ applications. In the end, it is all about satisfying a customer’s demand.

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