BLOG

A Kaiam Strategic Partner: Google?

September, 2014

Concerning the recent $35 million announcement by Kaiam of equity funding, our intelligence indicates that one of the two strategic partners is Google. We also think the other partner is Microsoft. In addition, we believe that the total valuation is two to three times revenue -- so over $70 million.

While Kaiam has clever packaging, we are not convinced that it has the lowest cost in the market. Nevertheless, the supplier has benefited from getting out there early in the data center/datacom space. It is likely that it owns the 10x10 business in that sector.

Unquestionably, signs of two giant enterprise firm funding Kaiam may be about ensuring direct access to unique 100G technology. Perhaps it is the vendor’s Hybrid Mixer PLC – and/or maybe something else that could possibly be on the drawing board that involves a coherent, serial 100G device. More practically speaking, there is a higher probability for a new 4x25G solution because both of these giant users are big proponents of 25GbE interfaces to reduce costs – and are maybe even looking to drive the developing standard in a direction most favorable to them.

If Google and Microsoft were providing the funding, while it is has not been their style up until now to be investors in an independent supplier for their own networks, which other types of entities would consider putting money into such optics development in the current market environment? Who would have thought way back when that the two companies would do their own manufacturing for their internal infrastructures?

[written by Mark Lutkowitz]

Share Article

Add Comment

 

Back

 

Read Comments

100G Transceivers Below $3/Gig by 2017? | fibeReality | fiber optic consultants
May, 2016
[…] point is that the principal buyers of 100G QSFPs right now are the hyperscale operators, and as we have reported in the past, both Alphabet’s Google and Microsoft have invested in Kaiam (along with the public […]
Knocking of Silicon Photonics Now Mainstream | fibeReality | fiber optic consultants
September, 2015
[…] (To read about Finisar and the VCSEL market, please click here. For further information on Kaiam’s strategic partners, please click here.) […]
InnoLight IPO: Google’s Vertical Integration Without a Mess | fibeReality | fiber optic consul
June, 2015
[…] Kaiam specifically, with both Google and Microsoft evidently backing it, we obviously would not be surprised if the IPO exit strategy is adopted once again. Yet, one […]
Convoluted 20/80 Rule in Data Center Optics | fibeReality | fiber optic consultants
April, 2015
[…] (For more insights on Microsoft’s investments in optical component companies, please click here.) […]
Integrated Photonics Clash | fibeReality | fiber optic consultants
March, 2015
[…] very significant problem. With both system vendors and little component firms (in some cases, being funded by huge enterprises to obtain the lowest cost devices) cherry picking the most lucrative opportunities, how does that […]