By Richard Acello
Small Times Correspondent
SAN DIEGO, April 22, 2002 -- OMM Inc., a four-year-old San Diego firm, is tapping into its reserves of patience as it waits for the telecom industry to adopt its MEMS-powered technology for optical switches.
MEMS-based switches route voice and data traffic from one fiber optic cable to another by steering light through a lens, reflecting it off a movable mirror and redirecting the light back into any one of a number of output ports. OMM's latest product is a 32 x 32 switch that Lawrence Gasman, Communications Industry Researchers president, called a culmination
In a 2-D system, the micromirrors move in a planer motion. In an evolving technology called 3-D, the mirrors can tilt and swivel. In-Stat/MDR MEMS analyst Marlene Bourne compared the difference in the two technologies to that between a seesaw and a gyroscope.
Bourne said OMM is the acknowledged leader in the 2-D arena. "They largely have it to themselves."
Since MEMS-based technology is still a novel approach to switching in the telecom market, the barriers to adoption of 3-D are even higher than 2-D, said Bourne. Even with 2-D, adoption barriers are significant. "The technology has proven itself, but the market isn't ready," said Bourne. The purchase lag includes time for demonstration and time to bring the carriers on board.
Nevertheless, OMM's investors have poured more than $150 million into its development. Roughly half has come from a consortium of its customers, and the rest from venture firms, says Phil Chapman, OMM's chief executive.
"No one is doing what we do yet," Chapman said. "There are probably 30 companies who have announced product for the last two years but no one has been able to commercialize it."
The CEO said the current telecom slowdown is "kind of irrelevant to us." That's because slowdown or no, carriers are in need of equipment that lower their costs, and raise efficiency. "The current networks are not particularly efficient. (They were) designed in the days of voice communications; now with data transmission everything is packetized. The industry going through massive set of issues. Prices they can charge their customers have crashed. They are busy in field trials of trying out next generation of equipment and we are sitting in the heart of it. Our goal is to make sure we're in the right place at the right time."
Chapman said the telecom industry is conservative by nature, but "at this point MEMS reliability issues have been addressed." The slow road to adoption is a fact of life in a healthy or unhealthy market. "But this is where they need to go."
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OMM was founded in June 1997 with the goal of solving a challenging optical network problem: creating a photonic signal switch that "skipped a step" of converting optical signals to electrical and back again. Beginning with its first product shipments in late 1999, OMM has since delivered its switching subsystems to more than 60 global customers. In mid-2001, OMM announced that it was discontinuing its 3-D MEMS efforts and focusing strictly on its 2-D products, which had already passed stringent Telcordia environmental and reliability standards.
Photonics. OMM designs and manufactures what it calls the first scalable MEMS-based all-optical switching subsystems. These 2-D switches connect inputs to outputs in different types of networks. They are encased in hermetic packaging based on OMM's proprietary technology.
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32x32, 16x16, 8x8, 4x4, OADS-8, 2x16 optical switches. OMM's MEMS-based optical switching subsystems include arrays of digital micromirrors. The micromirrors function as part of a low-loss system that eliminates the need for optical-to-electronic signal conversion.
OMM has closed eight rounds of institutional venture financing totaling over $150 million, most recently in November 2001 with a $22.3 million round. More than 11 institutional investors have participated, including Bessemer Venture Partners, Sevin Rosen Funds and Atlas Venture. Originally poised to go public in the late winter of 2001, OMM withdrew its IPO in early March of that year due to unfavorable market conditions.
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Annual sales: $6.933 million
Barriers to market
Packaging to meet stringent Telcordia reliability standards, a "very tough set" of requirements that include sealing, cycles of operations and temperature extremes.
Short-range: Successful field trials and early adaptors. Long range: To see all-optical switching deployed widely within the global communications structure within the next couple of years.
Why are they in small tech
"I've been in the semiconductor field for the last 10 years, this is a new and exciting area," said Phil Chapman, president and CEO. "We get to decide how to price it, how to package it, and everyone else has to follow what we set up, and you don't get to many opportunities in life to do that."
What keeps them up at night
"The timing of the adoption of this technology," Chapman said. "Being early is better than being late, but it is frustrating while you wait for the demand to catch up."
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