Routing start-up dreams in petabits

The aspiring, Montreal-based gear maker is creating a set of technologies capable of sending huge amounts of traffic at high speeds across even the largest telecommunications and Internet networks. The petabit router the company is developing will be able to handle 1,000 terabits of information, or 1 million gigabits of information. In other words, people could surf the Net using 4,000 times their current capacity, according to the company.

By comparison, current high-end systems from potential rivals such as Cisco Systems and Juniper Networks can route information only at gigabit speeds.

Richard Norman, Hyperchip president and chief technology officer, said that armed with a petabit router, his company might claim a stake in the routing market where giants such as Cisco guard their enormous market share.

"The routing market is a hard market to be in," said Alex Banik, analyst with market researcher The Yankee Group. "It's a lucrative market, but it's a hard one to crack."

Norman turned a system at a virtual reality company into the routing research project that became Hyperchip. Now he aspires to lead the charge into an era he claims will necessitate fewer, larger routers--a view sure to be questioned by Cisco, a company already contending with encroachment from Juniper into a market it once owned.

But Hyperchip is relying on a demand for network capacity that exists only on graphs, where lines shaped like hockey sticks show predicted growth of telecommunications traffic.

Analysts agree there will be a market for what Hyperchip is creating and, along with other start-ups, the company could reap rewards similar to the current crop of routing upstarts, such as Juniper and Avici Systems.

"I think Hyperchip is pretty realistic about the need" for more capacity, Banik said. "They're certainly one of the more interesting routing start-ups out there."

But just like those that have come before it, Hyperchip must contend with a plethora of well-funded competitors as it attempts to stand out. Other start-up outfits include Pluris, IronBridge Networks and Charlotte's Web Networks.

Two other potential entrants, Procket Networks and Caspian Networks, continue to toil secretly on what are believed to be similar projects. Caspian just garnered another $85 million from venture backers in a third round of funding to develop its technology.

For Hyperchip and others, tackling the competition could pay off. For example, a bare-bones Hyperchip system could cost a prospective communications carrier customer upward of $1 million, with a healthy profit margin going into Hyperchip's coffers, according to company executives.

Market researcher RHK predicts the market for high-end Internet routers will climb to $15.8 billion by 2003.

Norman, for one, is confident his company will hit the market at the right time, already heralding the dawn of a "petabit era."

Hyperchip plans to release initial versions of its systems for internal tests by the first or second quarter of next year, with tests scheduled at customer sites by the end of the second quarter. The company will formally launch its technology at the Supercomm telecommunications trade show next June.

The company said it plans to initially sell terabit-size systems that will be upgradable to petabit capacities.

With little to show for his efforts at the moment, Norman is left to ponder his company's potential. "We're going to do to Juniper and Cisco what Juniper did to Cisco," he said in an interview.