Developer Offers Tools That Ease Ease Entry Into SONET Market

After 12 years of developing custom SONET and SDH line cards for major telco vendors such as Alcatel (ALA), Lucent's (LU) Bell Labs, and Nortel (NT), Kalman Saffran Associates (KSA) is licensing its technology and targeting emerging SONET players in the data and cable TV vendor business. By using KSA services the company claims that clients can enter the SONET or SDH market twice as fast and for half the cost of developing technology internally.

"There's a steep learning curve associated with SONET," says Kalman Saffran, KSA president. "It's the most complex communications protocol invented to date."

He estimates that it takes a manufacturer two years to climb that curve, then two years to develop a SONET product. KSA's hardware, firmware, and software tools carry a company through the first two years, Saffran explains, including a pilot run of 50 to 2,000 units.

"They're going after an opportunity," says Ryan Hankin Kent Analyst Joe Savage. "There are a lot of nontraditional vendors and startups that are all of a sudden interested in SONET, because their products have a sufficiently high level of bandwidth / connectivity requirements, and SONET is really good for multi-megabit connectivity."

By licensing SONET technology instead of entering into custom product development, Saffran says a company may pay half as much for the same product, because the cost is shared among licensees. He maintains that sharing the same technology with competitors is not an issue, because for a standardized technology like SONET, exclusivity takes a back seat to cost, time to market, and reduced risk. On the down side, if the market for a manufacturer's new SONET product explodes, it ends up paying more in licensing fees than if it had developed its own technology.

Saffran estimates that - depending on a vendor's current fiber expertise - adding SONET capability to access products costs a vendor between $500,000 to $3 million, and backbone products start at $2 million. "We've seen some at $100 million," he adds. Back on the access side, he likens the portion that a line card would cost to comparing a modem cost to that of a PC - anywhere from 1 to 3 percent.

Now that SONET technology is mature among heavy-hitters in the telco world, KSA is targeting cable and data vendors with about $1 billion to $5 billion in revenues. A market for SONET products for non-telco vendors "is just starting to take off," Saffran says, estimating that some 300 companies in the United States and 900 worldwide are prime candidates for KSA's SONET services (including companies with revenues between $100 million and $1 billion).

Driving KSA's move are the usual suspects: demand for bandwidth and interoperability. "To be a serious ISP, you have to have SONET OC-3 connectivity," Saffran says. In cable, most fiber optics equipment is based on proprietary protocols. But Saffran says a lot of cable operators are interested in connecting to the SONET public network, which requires cable vendors to integrate SONET into their product lines.

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About Kalman Saffran Associates - Established in 1978, Kalman Saffran Associates (KSA) is a leading OEM product development firm that rapidly creates innovative products for premier companies in the data communications, telecommunications and interactive/CATV industries. To ensure success, KSA applies a proven, advanced engineering methodology to all projects. KSA has a staff of more than 100, including engineers specializing in today’s “building block” technologies such as SONET/SDH, ATM, xDSL, fiber optics, MPEG and PCI. KSA’s clients include industry leaders such as AT&T, Lucent, Nortel, Cisco Systems, 3COM, Scientific-Atlanta, PictureTel, Hewlett-Packard, Motorola among many others. For further information, visit KSA on the World Wide Web at http://www.ksa1.com.

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