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 10×10 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]