nLight Photonics has completed two funding rounds, raising a total of $60 million from Adams Capital Management, Menlo Ventures, Mohr, Davidow Ventures, and Oak Investment Partners. This funding is expected to be sufficient to carry the company to mid-2003, at which time initial products will have attained qualification. Third round funding will be sought in early 2003.

nLight Photonics plans to outsource production of its devices, and is currently finalising an agreement with a contract manufacturer holding substantial experience in pump module production.

nLight's device has applications in any situation where dynamic gain management is required. For example, when adding channels in an all-Raman system gain compensation may be achieved without a need to add or reconfigure the pump structure of the system. The bottom line in such a scenario will be cost reduction for the carrier.

Features

nLight Photonics combines a number of unique features in its products including the range of wavelengths covered, plus optical performance, integration, and size benefits. nLight delivers up to twenty wavelengths in a single package, whereas competitors are believed to be currently offering four wavelengths. This range of wavelengths gives enhanced control over the gain profile. With regard to optical performance, the device achieves 10 dB of gain with better than 0.5 dB of gain ripple. Utilising its own proprietary technology, nLight Photonics is able to offer this functionality in a very compact package.

Summing up the capabilities, Mike Jupina stated, "We offer a highly integrated device, without many of the components - such as butterflies and passive units - contained in competitors' products. Combined with a polarisation scrambler at the output, our device will offer the same functionality as that of larger more complex products. These factors lead to the small footprint, low cost, and simplicity of integration."

Competing products currently employ free-space optics or planar lightwave circuit technology to achieve four inputs, or wavelengths, as compared with nLight Photonics' twenty-wavelength capability. Mr Jupina noted that nLight has demonstrated devices offering up to sixty-six wavelengths.

With the introduction of next generation mesh and transparent optical networks, the ability to dynamically manage gain will become crucial - nLight Photonics claims to be able to offer this functionality in a single module.

An example of a possible early application is the use of pump modules for gain-fill compensation with EDFA devices. Mr Jupina noted that there are currently no companies actively selling devices for this application, due, in part, to the lack of proven capability in this area. A select number of customers have handled nLight's product, and additional companies have expressed varying levels of interest in doing so. Names of customers cannot be disclosed at this time.

Breakthrough technology

The major hurdles barring widespread adoption of Raman pump modules in optical networks today are seen to be the unproven nature of the devices and technology, together with pricing. With regards to the technology, Raman pump modules offer a revolutionary approach to gain management and it follows that educating the carriers is therefore a fundamental aspect of initiating the market. The modules can be used in place of Dynamic Gain Equalisation (DGE) or EDFA components, where they will offer advantages in terms of efficiency and simplicity.

Mr Jupina commented, "Currently, gain compensation on EDFAs is performed by DGE devices; Raman gain modules offer a different way of doing this, with the advantage that photons are not amplified only to be discarded at a later stage."

Currently Raman amplification systems are more expensive than comparable EDFA systems and in the present climate represent a significant hindrance to market development. Discussing pricing, Mr Jupina explained that the higher cost for Raman systems is due largely to the point on the cost curve of the 14xx nm pump components. As the market for these components matures, prices will fall and parity with EDFA systems is anticipated within two years. It is hoped that the early cost premium applying to Raman systems will be offset through demonstration of the operating cost reductions possible for carriers.

Dynamic provisioning

As mentioned previously, nLight Photonics has received interest in its products from carriers with respect to the dynamic network topology capabilities on offer. Though Mike Jupina noted that it would be fair to say interest from carriers to date had been less than might be hoped for. Despite this, there exists in the market a gradually building momentum toward dynamic network provisioning and the resulting improved revenue generation - currently the main interest is focused on the U.S. market. Mike Jupina emphasised however that nLight Photonics is not targeting solely the U.S. market, "We have every intention of addressing the European market, and hope to reach a position whereby we are able to set up a European operation."

Describing the advantages offered by deployment of nLight Photonics devices, Mr Jupina said, "Taking as an example a carrier with a requirement to provision a link between two cities for a large customer, traditionally this would take several days to implement, as much of the work must be carried out manually, with visits to points along the network. In contrast, our devices would allow the carrier to provision this same link dynamically within hours, or at most one day, and without the truck roll."

nLight currently plans to market its products solely through direct sales, however, it is envisaged that agreements with alliance partners will be sought in the future, in particular when the company comes to address geographic markets outside of the U.S. Mr Jupina noted that, to this end, nLight Photonics is presently engaged in initial talks with third-party companies.

Market size

The market for nLight Photonics' devices is presently unclear. nLight's own estimates put the market at 'several hundred million dollars' by 2005 to 2006, a figure based on the supposition that the main competition will arise from alternative Raman technologies that are on the market today. It is expected that these technologies will gradually evolve to deliver multiple wavelength devices.

Mr Jupina commented that the potential market is basically the total Raman amplification market, plus a new, developing market arising from the increased functionality offered by devices like those from nLight. The company anticipates that the market for its devices in basic Raman pre-amplification applications will begin during 2003; the market for dynamic gain applications is projected to commence around early 2004.

Tying the market value estimate to the approximate cost for a Raman amplifier - around $15,000 - gives a total market volume of 25,000 to 30,000 units. Mr Jupina stated that nLight Photonics would be capable of delivering a substantial portion of this production volume if required, although an unknown portion of the market is expected to be taken by two or three major competitors.

Lesser issues that nLight Photonics has to address are of a technical nature. Mr Jupina noted that the main technology milestone to be passed relates to device consistency - producing emitters that fire at the same power to give uniform power output across the module. This is important because of the correlation needed with the degree of gain that can be compensated for.

Regarding the market environment, Mike Jupina said that, if anything, the market slowdown had been advantageous to nLight Photonics, and had certainly not been detrimental to the company's prospects to date. nLight is presently in an early stage of development as a company and working in its favour are the fact that carriers will be seeking more cost effective solutions in the future, plus the elongated time frame allowed to reach product commercialisation.