Teem Photonics launched in November 1998 and is headquartered in Meylan, Grenoble, France, where the company has a 4,000 square metre facility incorporating research and development, manufacturing, sales and marketing, and support operations.

The company has progressed through three distinct stages in reaching its current position. Teem Photonics initially concentrated solely on technology before progressing to a production phase, with the establishment of a manufacturing plant and associated support organisation. A prime focus during this stage was quality control. The company is now in a customer-oriented phase with development of sales and marketing operations. This present phase is built on the solid foundations of its technology and manufacturing capabilities. The company currently employs approximately 90 people, of which 15 are engaged in sales and marketing activities.

To date the company retains all major production processes in-house. The key reason behind this strategy is simply an absence of suppliers able to perform the processes necessary for the manufacture of critical components. Specific components, for example pump lasers, are bought in from external companies. Key to Teem Photonics' strategy is the ability to produce devices efficiently and in volume. This is particularly important when addressing the price-sensitive metro market.

Funding

Teem Photonics has received $36 million from two funding rounds - an initial seed round raised $2 million, followed by a second, major funding round in mid-2000 which raised $34 million. Initial funding was forthcoming from French venture capital companies, including Banexi (BNP Paribas) and Innovacom - a fund owned 50:50 by France Telecom and Newbridge Networks. U.S. companies Baker Capital and Lightspeed Venture Partners supplied second round funding. Current funding is projected to be sufficient to carry the company through the next eighteen months - to mid-2003 - in a low sales environment.

Dr Kevorkian stated that the company does not face any short-term funding issues. He added, "Teem Photonics is an efficient, low-spending, organisation, aided by the fact that the technology enables low fixed manufacturing costs and low overhead.

Discussing the funding environment for start-up companies, Antoine Kevorkian commented that the availability of funding, and funding levels for individual companies, are no guarantee of success. Funding awards may serve to eliminate company and product differentiation through a glut of cash for 'fashionable' technologies or products.

Citing Arrayed Waveguide (AWG) technology as an example, Dr Kevorkian noted, "Vast amounts of funding was made available to companies developing multiplexer products utilising AWG technology, however, ultimately the world market for these products is finite. The end result is that some companies fail due to lack of a market."

He added that Teem Photonics has been conscious of this issue from its inception, and has made efforts to avoid it - "Amplifiers are one component that have remained differentiated."

Location

Commenting on France as a base for start-up companies, Dr Kevorkian noted that the Grenoble area, where Teem Photonics is located, is relatively well developed in this respect. This is in contrast to France as a whole, which does not display a highly developed start-up company culture. The main geographic areas for start-up companies are Paris and Grenoble - the latter currently accommodates approximately ten significant technology start-ups, specialising in the fields of optical telecommunications, semiconductors and materials.

The fundamental technology underlying Teem Photonics devices is the process of ion exchange in glass, as opposed to silicon wafers. Waveguides are embedded into a glass wafer using ion exchange such that no etching or deposition is involved. The resulting waveguides demonstrate very low polarisation and loss characteristics.

Other companies besides Teem Photonics are actively employing this approach, including JDS Uniphase through its division - formerly IOT - in Germany, and Northstar Photonics in the U.S. JDSU is using this process for non-erbium-doped applications; Northstar Photonics, who initially focused on lasers, has begun to apply the technique to amplifiers.

Intellectual property

Teem Photonics currently holds approximately 30 patents that are either filed or pending. These patents cover the technology, functionality and applications for the company's products. Dr Kevorkian noted that a further four patents are in the late stages of preparation in readiness for submission to patenting authorities.

Teem Photonics' EDWA, planar splitter and FSC products have now achieved Telcordia qualification.

EDWA

Teem Photonics' EDWA product family comprises several devices, each of which offers compact footprint, low power consumption and high performance at low cost. The core product is the soon-to-be commercially launched Metro EDWA. This is an upgraded version of the original EDWA device developed for access and metro applications. Continuing research, and discussion with customers, revealed that the EDWA product was underpowered for some metro network applications. The Metro EDWA offers boosted power output, ranging from 10 to 15 dBm. This device, approximately half the size of a credit card, has been designed for single-port applications in the C-band. The Metro EDWA, supporting from one to several channels in DWDM systems, is to be officially launched at OFC in March 2002.

Regarding development of the new generation of EDWAs, Antoine Kevorkian explained, "We proactively supply sub-components, as well as complete devices, to our customers in order to gain feedback regarding performance and any shortcomings. Such feedback assisted us in developing the new generation Metro EDWA product."

The company also produces EDWA Arrays - these devices offer multiple individual amplifiers (currently 4) in a single package and can used in many parts of the network. One example application is for compensation of losses in switch fabrics such as MEMS switches requiring individual power control on each port. Historically, Variable Optical Attenuator (VOA) sub-components have been used. These subtract dBs from the signal whereas the amplifiers add dBs. This increased level of control offers improved overall functionality on the switch. These devices will have applications in all-optical equipment, such as OADM systems, in the future. The company has also received interest in integrating more closely the array amplifiers into an extended range of system components.

Discussing the positioning of Teem Photonics' EDWA products, Dr Kevorkian said that EDFA devices are seen as the primary competition. However, EDFAs are larger, more expensive, and are designed to perform a different role to the EDWA devices, although there are overlaps in applications of the two products. A second competing product is SOAs. These devices deliver lower performance especially the noise figure but are similar in terms of size and price. Overall, the company does not believe that there are any directly competing products.

Antoine Kevorkian discussed further the rationale behind Teem Photonics' EDWA devices, "Amplification is necessary in optical networks for a number of reasons, perhaps due to distance, at distribution points, or when components are added to a network. This amplification function is generic - the factor necessitating amplification is irrelevant. Basically, whatever type of network you have, amplification will be needed - only the degree will vary. In the past, the high cost of EDFA components, plus the industry view that these are high performance devices, has restricted the application and implementation of this functionality. Our devices serve to both lower the cost and simplify implementation."

Dr Kevorkian noted that the EDWA products are compatible, and will operate in tandem with, EDFA components, at least for single port applications. This factor is important in allaying concerns that customers may have regarding replacement of components already installed in systems and networks. Commenting on possible problems arising from the single-sourcing of EDWA devices, Dr Kevorkian said that the company is monitoring this, and that it is an issue that would be addressed in the future if it became a restricting factor for Teem Photonics' customers.

Planar Splitter

Teem Photonics' planar splitter devices are targeted primarily at the developing FTTx market. The devices may be used in place of a multiplexer in some circumstances and also have applications in the division of signals within the architecture of a switch. Teem Photonics considers these products to be superior to the competition in terms of optical performance as a result of the technology employed - with the 1x8 device, polarisation dependent loss is not more than 0.5 dB. This equates to between one eighth and one tenth the losses achieved by competitor's offerings. Port to port uniformity is similarly claimed to be the best available. The main competition in this sector comes from JDSU, followed by a number of small start-up companies.

In terms of manufacturing planar splitter devices, Dr Kevorkian commented that yields of greater than 80% are now being achieved. Teem Photonics is continuing to work at improving manufacturing efficiency through increasing the automation of back-end production steps for these devices.

A number of operators in Europe and the U.S., including the RBOCs, are currently experimenting with Teem's planar splitter devices for use in FTTx networks. The company has also seen limited successes in the potentially huge Japanese market, although Antoine Kevorkian noted that this is a very tough market to penetrate.

For the planar splitter device the company expects sales of 30,000 to 40,000 units annually, with prices ranging from $300 to $1000 per unit. Dr Kevorkian noted that unit sales for the product could reach ten times this figure if, and when, the FTTx market takes off.

The U.S. represents a major market for Teem Photonics, although the company does not restrict itself to any geographic market. Presently, around two-thirds of sales by value derive from the North American market.

Customers

Teem Photonics currently has approximately 75 signed-up customers. In the U.S. the company lists 20 to 30 potential customers. Dr Kevorkian cited ONI as an example of the type of company that Teem Photonics would hope to supply. The initial aim is to sign two or three major equipment vendors, plus a number of smaller companies.

As mentioned previously, key markets for the company are the metro and access sectors - representing the EDWA and planar splitter products respectively - both of which are experiencing relatively strong growth. Not surprisingly, the company sees these devices as crucial to its success during 2002. The forthcoming Metro EDWA device will be key to this success. The FSC device has applications primarily in the long-distance market; as a result, sales for the product have slowed considerably since its launch in 2000.

Antoine Kevorkian stated that devices from each of Teem Photonics' product lines have been supplied to customers, adding that several hundred EDWA devices have been sold to, and successfully tested by, customers. Both first generation EDWA and planar splitter products have received qualification from customers.

Partnerships

Antoine Kevorkian stated that there are currently no plans to partner with third-party companies. The intention is to grow Teem further before engaging in any partnering or alliance activity, tempered by the proviso that market conditions could conceivably dictate revisiting this strategy. In the longer term, such activities are viewed as an effective path to both improvements in production efficiency and expanding the company's addressable market.

Reflecting on France as a company location, Dr Kevorkian does not view this as offering any significant advantage to Teem Photonics, particularly as the company is addressing a global market. Antoine Kevorkian commented, "Our customers are based in locations worldwide, and will be selling their systems to customers worldwide."

One slight benefit arising from being a French company noted by Dr Kevorkian is that start-up costs will be lower than for an equivalent U.S. based company. Overall, operating expenses and employee retention costs should also be lower for a company headquartered in France.