Infinera

History

Infinera was founded in 2000 as Zepton Networks by Drew Perkins, Jagdeep Singh and David Welch.

It raised its first round of funding in April 2001. The startup remained in stealth mode until its first products were launched in 2004, although a few early media articles did describe the company's component technology - a photonic integrated circuit in indium phosphide.

Underwritten by Goldman Sachs, Infinera went public on the NASDAQ in 2007, raising $182 million.

David Welch was recognized in 2013 with the JJ Thomson Medal for Electronics, an award from the Institution of Engineering and Technology for his role as a pioneer in the field of optical devices and optical networks, including PICs.

In August 2015, Infinera acquired Transmode, a supplier of metro packet-optical networking solutions based in Stockholm, Sweden (following an offer made in April 2015). Transmode shareholders receiving a mix of cash and Infinera shares, giving a total equity value for Transmode of about $350 million.

Today, the company has its own fab in Sunnyvale, with component packaging occurring in Allentown, Pennsylvania, plus the former Transmode facility in Stockholm. For many of its products, Infinera designs and manufactures in-house the photonic integrated circuits (PICs), the ASIC chips, and the hardware and software systems, including operating and management systems and software-defined network (SDN) software to extend network virtualization into the optical layer. The company refers to its combined component development, product development and system manufacturing as vertically integrated.

Industry overview

Optical networking equipment carries information using light waves via fiber optic cables. With the advent of wavelength-division multiplexing (WDM) systems, larger amounts of data are transmitted by using multiple wavelengths over a single optical fiber. Network operators deploy WDM systems to carry communications between continents, across countries, between cities and within large metropolitan areas. Growth in bandwidth-intensive services – like streaming high-definition videos, the proliferation of mobile broadband and the growth of Cloud-based services – is driving the need for increased bandwidth. Optical networking is one solution for supporting growing bandwidth requirements. Network operators compete by delivering differentiated services; to do so, they need to scale their networks to create rich end-user experiences based on efficient high bandwidth transport.

Infinera products

Infinera has pioneered design and manufacture of large scale photonic integrated circuits (PICs). Over 300 patents have been filed by Infinera in fields including optical transport and virtualization of optical bandwidth.

In March 2011, Infinera announced "500,000 hours of failure free operation worldwide". The company claims that its PIC technology has never failed in a customer network.

The production efficiency of using monolithic integration with PIC has permitted Infinera to build large super-channel cards with capacity of 500 gigabit/second. In 2015, it announced Facebook had deployed an Infinera Intelligent Transport Network to light the world's longest terrestrial optical network route (3,998km), capable of delivering up to eight terabits per second of data transmission capacity (equivalent to streaming one million high-def videos simultaneously).

This large throughput may be in excess of actual carrier requirements. Infinera has changed its business model to permit purchase of a 500 Gbit/s. line card by a carrier, but only switch on capacity in 100 Gb/second units of capacity. The company refers to this pricing model as "Cashflow-Efficient Instant Bandwidth" and has trademarked the term. The company's technology road map projects linecards' throughput to scale to 4 terabit and beyond.

Business strategy

Its business strategy has been based upon introduction of leading edge speeds, initially with 10 Gb/second, and as of 2013, 100 Gb/second and 500 Gb/second based upon Superchannels (or combining channels). These higher speed offerings are referred to as coherent super-channels. These higher level speeds are enabled by the use of Photonic Integrated Circuits (PIC) which combine digital circuitry and photonic circuitry in a hybrid multi-layer (3-D) component. PIC changes the manageability of optical networking: it has four major benefits: (1) PIC is smaller taking up less room in equipment cabinets than the traditional approach of having separate optical and electronic circuitry (a significant issue in retrofitting terrestrial and the 550,000 miles of submarine networks), (2) it provides for lower energy consumption, (3) the integration permits the provision of real time virtualization of optical bandwidth, and (4) purchasers can buy service ready capacity in large chunks, only pay for the capacity switched on, purchase and switch on unused capacity in 100 Gb/Sec increments without additional equipment installation eliminating the normal costs of service engineers and time delays.

Real time virtualization of bandwidth represents a relatively new capability in optical transport networks. Previously, engineers would have to physically reconfigure equipment to provide for reallocation of bandwidth to different customers channels or services. Provisioning is exceptionally fast with PIC and virtualization. On August 14, 2013, DANTE (Delivery of Advanced Networks to Europe, a research and educational network) and Infinera claimed that they had set a Guinness World Records by provisioning 8 Terabit/second of long haul capacity on the GÉANT network in 19 minutes and 1 second using its DTN-X packet optical transport platform from Vancis Amsterdam in the Netherlands to GlobalConnect Hamburg, Germany.

Infinera is a vertically integrated company. It has its own fab in Sunnyvale, CA with component packaging occurring in Allentown, PA. Infinera designs and manufactures everything from the ASIC chips to the complete hardware and software systems in-house.

Customers

Infinera reports that it had deployed its systems to 126 customers worldwide (as of January, 2014). Customers included Tier 1 domestic carriers, Tier 1 international carriers, MSO/cable operators, Internet content providers, incumbent carriers, research/education/government, and wholesale bandwidth providers. As of January 29, 2014, 20 of its customers had adopted its DTN-X 500 Gbit/s capable product.

Competition

Infinera's major direct competitors are Alcatel-Lucent, Ciena Corp., Cisco, Ericsson, Huawei Technologies and ZTE.

Major players in the more broadly defined optical market according to technology consulting firms (e.g. ACG) that track the space include Adtran, ADVA, BTI, Cisco, Coriant, Cyan, ECI Telecom, Fujitsu, MRV, NEC, Tejas and Fibrolan.

Management