Sycamore plants series of lucrative seeds

The company today announced a series of moves aimed to attract telephone carriers and new service providers to its hardware and software offerings. Sycamore plans to ship new technology this spring, and has wrapped up a $20 million third round of financing. Additionally, the company disclosed a $25 million commitment from Williams Communications.

Sycamore is among a slew of start-ups developing technology that will allow telecommunications firms to migrate from older technologies to Internet standards, while at the same time expand their bandwidth capacity. Another industry strategy centers around software services, which lets providers diversify their products for businesses and consumers.

Sycamore executives say the company is at the center of a market consumed with an insatiable demand for bandwidth, but must grapple with the requirement that service providers offer a wide array of products to differentiate themselves.

Sycamore's executive team is headed by the two former leaders of Cascade Communications, a once high-flying networking company that is now part of Ascend Communications.

Cascade is one of the few small but fast-growing firms who managed to flourish in data networking amid strong competitors like Cisco Systems.

"We have learned a lot of good lessons from that successful experience," said Dan Smith, president and chief executive of Sycamore.

Due to start shipping this month are three initial products that aim to simplify networks that carriers continue to upgrade and enlarge--two essential dynamics that have turned the high-end fiber optic-based equipment niche into a lucrative multibillion-dollar industry.

"That's the key, they're shipping something," said Matt Steinberg, director of the optical networking program for Ryan Hankin Kent, a technology consulting firm. "That's been their modus operandi since they started Cascade."

In addition, Sycamore announced that Williams Communications has agreed to order $24.5 million worth of equipment, the company's first publicly announced customer catch. Williams currently deploys the SN 6000 in its production network and plans to test the company's forthcoming SN 8000 technology.

Williams is among several new entrants into the telecommunications market that are building new nationwide fiber optic networks for wholesale and business use.

"The more you give people, the more they'll use," said Deb Mielke, principal at Treillage Network Strategies, a McKinney, Texas-based technology consultant. "We'll find new ways to use bandwidth."

Sycamore also wrapped up a third round of financing, bringing the total investment in the firm to $40 million. In the latest $20 million round, new investors include Amerindo Investment Advisors, Bowman Capital Management, Integral Capital Partners, and Pequot Capital.