Carriers Get Ready For Atoga Party

By Evan Bass
Managing Editor, Fiber Optics Online

Come mid-January, Atoga Systems will pull the sheet off a product it says will help carriers broaden service offerings and reduce operational costs.

Fremont, Calif.-based Atoga, an 83-employee developer of wavelength division multiplexing (WDM) products, calls its masterpiece network architecture FastApp.

The FastApp architecture integrates Internet Protocol (IP), Synchronous Optical Network (SONET) and WDM layers into one platform, aiming to simplify today's complex provisioning process and enable carriers to connect more users to services more quickly and cost-effectively across metropolitan optical networks.

FastApp's selling point is that carriers will no longer have to manually configure three separate network layers -- IP, SONET and WDM -- to provision services. Instead, carriers will specify network performance per user and per application in a point and click fashion.

Because control software is tightly integrated, the FastApp architecture will be able to assign wavelengths depending on the needs of high-end applications and network availability at the moment.

Performance can be guaranteed in the Atoga architecture because packet traffic is policed directly on the optical network. This enables carriers to offer per-user, per-application service-level agreements and retail on-demand, metered application services.

Atoga CEO Cüneyt Özveren previously co-founded Berkeley Networks, where he was the VP of engineering and manufacturing. He led the hardware and software development efforts of Berkeley's gigabit switch router. Berkeley Networks was acquired by FORE Systems, which was subsequently sold to GEC.

Founded in December 1999, Atoga took in $14.5 million of financing in May, gathering funds from NEA and Sequoia Capital. Atoga is planning its next round of financing to close shortly.

Sizing Up The Field
Özveren says Atoga has essentially three types of competition.

"The first type of competition is incumbent big-name vendors who do not have the same integrated technology as us but have the muscle to offer separate boxes as an equivalent solution," Özveren says. "So you could see Cisco or Nortel coming in. Let's say Cisco has a Pirelli optical transport, a Cerent SONET ATM, and some form of a Cisco router in three separate boxes, and they say we can do all of these things.

"The fundamental difference there is that a provisioning event - which is simply connecting a customer to his applications at the router layer - the router doesn't tell the SONET ATM that hey, my bandwidth requirement has increased, so go ahead and dilate your pipe. There is no such protocol today where the router talks to a SONET ATM and the SONET ATM talks in optical transport. Routers talk among each other, the SONET devices talk among each other, but they don't talk to each other on a vertical basis. And that's the fundamental provisioning difficulty that people are running into.

"The second group of competitors are start-ups who are ahead of us, but have not gone after the provisioning piece. A lot of those start-ups wanted to make bandwidth abundant. They were building devices, essentially Layer 2 devices, that allowed you to put an OC-48 or a 2.5 Gbps interface on it and make bandwidth abundant. They did not consider what happens after bandwidth becomes abundant to the service provider. How is he going to change his business model? That's where we come in.

"The third group is people who are behind us who we do not know about who may be thinking the same thing we are, and we have to be ahead of them in terms of delivering a product."

Making A Splash At The Show
Atoga will make its debut product announcement at the SUPERnet show in Santa Clara, Calif. on Jan. 15-16. Product pricing has not been established.

Atoga VP of marketing P.G. Menon says the company can justify to customers that they can get back the price paid for the equipment within a year. But in today's market of investors who wanted to see profit yesterday, is that fast enough?

"Recently when we talked to one of our customers, they said they had a board meeting recently, and they said you have to change your business plan, where you cannot take a year to generate revenue," Özveren said. "They essentially said that hey, if you look at the reality of the matter, even though it is data that is driving the demand for bandwidth, the revenue is coming from voice. So their board has decreed that they will move away from their original plan of being a service provider or a CLEC for broadband IP services, to including IP services as well as traditional voice.

"That certainly works to our advantage because we have integrated both the TDM piece and the IP piece. But it just shows that people are reacting very quickly in terms of saying let's go to the more traditional business model of having voice as TDM voice - the traditional voice that we have known and loved for a while - because that's essentially the cash cow. And let's look at the sexy data services as something we can build up as opposed to your fundamental value proposition. Those data services will come over the horizon, it will just take a little longer."

As for going public, Özveren is admittedly on the conservative side, saying he wants three quarters of sequential revenue before launching an IPO.

Andrew McCormick, analyst with the Boston-based Aberdeen Group, says Atoga has several points in its favor.

"One, they're not just concentrating on the bottom of the protocol stack," McCormick said. "By the time they're done, they're going to get all the way to the application layer and be able to do application switching. That will probably have a lot of implications for Application Service Providers, and companies in the BLEC space with the multi-tenant units and delivering applications directly to them."

Michael Kennedy, co-founder of Boston-based management consulting firm Network Strategy Partners, also likes Atoga's story.

"Atoga is poised to roll out products that will enable carriers to retail their assets in a new way, going beyond today's fiber or bandwidth leasing model toward the huge revenue opportunity of selling metered application services," said Kennedy. "Atoga's FastApp architecture is designed to increase the velocity of services delivered by carriers. This is accomplished through application-driven provisioning. Application-first orientation distinguishes Atoga from the crowd of vendors developing systems for this burgeoning market."