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My techie pals showed me the feature on Enron in the most recent version of
eCompany. What a great feature. Congratulations. Best, Jeff Karen Denne 02/09/2001 09:12 AM To: Jeff Dasovich/NA/Enron@Enron cc: Subject: eCompany Now Brief This is in today's online "Future Boy" column in eCompany Now -- we had a great meeting with them on Wednesday! Future Boy Bringing Opto-Electronics Out of the Stone Age By Erick Schonfeld at http://www.ecompany.com Optical networks. It sounds so cutting edge. Billions of bits of data riding on beams of light. The most important, most urgent, information in the world encapsulated within photonic pulses. Yet the components that go into optical gear are often still assembled by hand. Go into a factory where optical equipment is made and you'll find acres of work benches manned by technicians in white lab coats. There is not even an assembly line. It's labor-intensive and practically preindustrial. If optical networks, and ultimately optical computing, are ever going to rival their electronic predecessors, the companies that manufacture the components that make them possible must first master the art of mass production. As simple as this may sound, it is in fact extremely challenging. Photonic components -- such as laser pump diodes, specialty fibers, and optical chips with so-called waveguides that direct light through controlled channels -- are typically made from materials that are not well understood, in contrast to the silicon-based chips used in computers, routers, and switches. "Every industry has to go through an evolution of materials knowledge and an experience curve that just takes time," explains Rick Tompane, CEO of Gemfire, a startup that is figuring out how to make optical-integrated circuits using standard semiconductor equipment. There's a big difference between making components that are designed to move electrons, and manufacturing components that move pulses of light. An electronic chip, for instance, consists of circuits of metal etched onto silicon. In contrast, an optical chip is usually made from more exotic materials, such as lithium niobate. And instead of metal circuits, it has channels, or waveguides, that guide light passing through it to a desired strand of optical fiber. Rather than etched grooves, these tiny channels are solid veins with a different refractive index than the surrounding material. Learning how to adapt electronic chip-making techniques to produce waveguides and other components in mass quantities has been difficult -- and yet optical-networking companies have to figure this out, if only because the current system is so arduous and antiquated. Many pieces of optical equipment require dozens of laser diodes, which often have to be manually connected to other components. For instance, dense wave division multiplexing (DWDM) boxes, which allow telecom companies to send 32, 40, or even 96 wavelengths of light down a single fiber-optic strand, require different laser diodes that each emit light at slightly different wavelengths. If each of these diodes is inserted by hand, too many opportunities exist for things to go wrong. But companies such as Gemfire and U.K.-based Southampton Photonics are beginning to automate the manufacture of key optical components. Gemfire has figured out a way to combine diode arrays and waveguides into optical integrated circuits that can be produced using automated equipment. Theoretically, these circuits could be used in DWDM boxes, eliminating the need to have 40 separate laser diodes and to connect each one by hand to a waveguide chip. For now, Gemfire is trying to get these chips into the optical amplifiers that regenerate fading light signals after they've traveled long distances. Gemfire has developed a diode array integrated with eight waveguides that would replace eight separate amplifiers, and thus could amplify eight separate strands of fiber. Over time, Gemfire will combine even more elements into its optical integrated circuits, including traditional electronic circuitry, so that conversion from the optical to the electrical domain can happen right on the chip. It is this approach that has allowed the private company to attract heavyweight investors such as Cisco Systems, Corning, Intel, and Kleiner Perkins. Floyd Kvamme, a partner from Kleiner who sits on Gemfire's board, was one of the founders of National Semiconductor. "So much of what we are doing reminds him of what they did in the early days of National Semiconductor," says Tompane. Southampton Photonics offers a similar amplifier product. It, too, has invented an amplifier that can handle eight separate strands, except that its shares diodes between them. But Southampton is also branching out into some more daring pursuits -- as one might expect from a company co-founded by David Payne, who 15 years ago led the team that invented the erbium-doped fiber amplifier, the basis of most of today's optical amplifiers. Payne is now looking into other ways to control and manipulate light. One of the more intriguing solutions is a specialty fiber, known as a Bragg grating, that acts as a filter because its index of refraction changes along its length. Working with these fibers, equipment-makers might no longer have to build DWDM boxes with 40 specialty diodes. Instead, they could simply stock a box with a product from Southampton that combines standard, off-the-shelf diodes with these Bragg gratings, which are stuck in front of the diodes to get whatever wavelengths may be desired. Southampton Photonics makes these fiber filters through an automated, computer-controlled process that can create custom filters for clients in a matter of days rather than weeks. And the process is so fine-tuned that it will allow DWDM manufacturers to reduce the separation between the wavelengths going down a single fiber to 25 GHz, as opposed to the 50 to 100 GHz intervals that are considered state-of-the-art today. Wavelengths must be separated by intervals because when they are too close together, the signals can get confused and distorted; by reducing these intervals, DWDM boxes will be able to cram 160 different light beams down a single fiber. In a way, it's appropriate that Southampton Photonics is based in England. It was there, after all, that the Industrial Revolution took hold, first introducing the notions of automation and mass production. Thanks to Payne and his ilk, the optical-equipment industry -- a high-tech sector trapped in a low-tech method of production -- is about to be dragged into the 21st century. Lagniappe: Last month, I wrote a feature on Enron in the January/February issue of eCompany Now titled "The Power Brokers." So guess what Business Week's current cover story on Enron is called? "The Power Broker." Now, you'd think the editors at Busy Week could come up with their own headline -- sorry, dropping the "s" does not count as an original thought. Anyway, Enron's soon-to-be CEO, and Busy Week cover boy, Jeff Skilling stopped by our San Francisco office Wednesday. And one of the things that really stood out from the conversation (after I just barely beat him at a game of foosball) is that he is particularly gloomy on the economy's prospects. Not a good sign coming from the guy who runs one of the 20 largest companies in America (Enron's 2000 revenues totaled $101 billion). "I think we are headed for a recession," he says. "Look at credit spreads for companies. You can't get money. That says the marketplace expects big defaults." If companies can't get money, Skilling reasons, "what you will see is a big slowdown in the deployment of technology." And he does not think this slowdown is a mere inventory correction that will pass in a couple of quarters. The situation reminds him of the bust in the oil and gas industries during the 1980s, which followed a similar boom in capital spending to produce more oil. "It took decades to chew through all that extra capacity," he remembers. This time, the capital spending has been on routers, servers, and telecom equipment. And the companies who make that Internet plumbing may not have seen the worst of it yet. "All of these guys are going to hit the wall," predicts Skilling. The smart thing to do would be to cut back production to match lowered demand. But the danger is that, just like the oil and gas companies of yesteryear, "instead of producing less, they will produce more to keep their creditors at bay. And it will feed on itself." Skilling also fears that there is little the government can do. "Even if the Fed continues to lower interest rates, that only decreases the cost of good credit. The spreads on bad credit [i.e., the kind most companies need to purchase more Internet equipment] continue to rise. And tax cuts go to consumers' pockets. The one thing that could help is if the government changes the depreciation rates it allows companies to recognize for capital equipment." Washington, are you listening? ****************** Newsletters at eCompany.com ****************** Today at eCompany - Sign up now to receive the latest eCompany.com headlines and stories delivered daily. Begins February 13th. http://tm0.com/sbct.cgi?s=118309364&;i=295984&d=1007265 ***************************************************************** ***************************************************************** You are subscribed to 'Future Boy' with the address: meredith@enron.com. If you would like to unsubscribe, simply reply to this message with the word 'unsubscribe' in the subject line. If you would like to send feedback to the author, please send an email to future_boy@ecompany.com. *****************************************************************
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