GiantLoop Closes on $40 Million

Startup GiantLoop Network Inc. highlighted an emerging market yesterday in announcing its plans to offer an optical alternative to large enterprises.

GiantLoop has scored $40 million in funding from Greylock, Roger Marino, and Optical Ventures LLC. It will be using the cash to prepare a suite of services, including optical integration and managed optical networks, for large enterprises in the U.S.

Up to now, most companies involved in optical integration have focused on the carrier market. But GiantLoop joins a growing number of service providers and vendors who see big opportunities in the enterprise space.

"We're looking for customers in the Fortune 250. We'll assess their bandwidth needs for data networks and storage and devise a solution that lets companies centralize their activity at one site," says Jon Oltsik, VP of corporate marketing and strategy.

Financial companies with big online trading divisions, for instance, often have large, multisite intracompany networks. These nets comprise multiple leased lines, often from different carriers. The lines are used to link geographically dispersed server clusters, to connect data centers in redundant configurations for backup, or to link data centers with storage-area networks (SANs).Often, devices and hosts throughout these big-company networks have unique interfaces: Mainframes, for instance, may use an ESCON interface, while SANs require Fibre Channel, and other data connections use Ethernet. Some complex hardware and software setups (involving CSU/DSUs, integrated access units, and other gear) must be made in order to get the network to run on the leased lines.

GiantLoop's opportunity, spokespeople say, is to eliminate the multiple leased lines and special interfaces and install instead a single optical link equipped with wavelength-division multiplexing (WDM). This link can offer bigger bandwidth faster and more efficiently and directly to a broader range of devices, reducing configuration and equipment costs.

To achieve all this, GiantLoop is acting as an equipment integrator as well as a greenfield service provider in its own right. It has a nonexclusive agreement to resell the Optera Metro platform from Nortel Networks Corp. (NYSE/Toronto: NT) to enterprise customers. GiantLoop will take charge of configuring this platform for customers, setting up all interfaces and testing them in its lab in Waltham, Mass.

The vendor also is working to lease dark fiber from several carriers in order to offer IP services in major cities, including Boston, Chicago, New York, and San Francisco. It will use these links along with the Optera Metro platform to create mini-MANs (metropolitan area networks) for large companies. They won't say which carriers they're working with, but rumor has it that one of them is Metromedia Fiber Network Inc. (Nasdaq: MFNX)

GiantLoop says it's already building out customer networks and has at least one paying customer, which it can't yet disclose.The brash startup faces competition from a range of players. Cisco Systems Inc. (Nasdaq: CSCO), for example, OEMs the FTP DWDM platform from Adva AG Optical Networking (Neuer Markt: ADV) in order to address the needs of enterprise customers. And several service providers, including the likes of Telseon and Yipes Communications Inc. specialize in high-speed optical links for metro-area businesses.

Experts agree that GiantLoop will need to diversify its platform offerings in order to stay ahead of providers like these, who typically are locked into a single vendor's DWDM platform. So far, the vendor says it's talking to vendors other than Nortel, but no agreements have yet been set.

GiantLoop also acknowledges concerns about meeting demand. "There's more demand than supply in this space right now," says Oltsik. But so far, he says, he's confident about customers seeing the value of GiantLoop's service. And barriers to entry are high enough to keep the number of players low -- for the moment, at least.

-- Mary Jander, senior editor, Light Reading http://www.lightreading.com