Tech-wreck survivors hit big time
Australian scientists have invented a way to avoid overload on the internet, writes Adam Courtenay.
Business success stories don't often have the word "manufacturing" attached. There are plenty of brilliant ideas to fill perceived gaps in the consumer-services marketplace - but what about inventions? We're not talking apps, but widgets that do things.
Simon Poole and Steve Frisken invented such a widget, without which the internet wouldn't be as capable, or as durable, as it is.
Frisken and Poole were founders of Engana (now Finisar Australia) and developed technology to allow the internet to switch capacity instantly and thereby solve a problem that threatened to forestall online growth.
Their big idea was the wavelength selective switch, which enables different wavelengths of light to be switched between optical cables.
To explain its use, Poole says think of a football game. Thousands rush to a stadium on a Saturday night, with everybody wanting to use their phones to send messages, emails, texts, photos and video footage. How do you suddenly cater for the upsurge in online demand from 50,000-plus spectators?
Before the advent of optical-switching technology, it meant manually rejigging the network, which could take weeks to install.
Their device allows a network operator to send signals down the line to reduce or add internet capacity as required. "What happens when the crowd [is gone] the next day?" Poole says.
"The stadium is quiet, and there's one guy mowing the field. Our technology allows network operators to reconfigure networks on the fly - changing the number of signals and the wavelengths required. We can allocate capacity to wherever it's needed."
Poole and Frisken were recently awarded the Australian Academy of Technological Sciences and Engineering's Clunies Ross Award for innovation in science and engineering.
Poole describes Frisken and himself as survivors of the tech wreck earlier in the decade. They had successfully launched technology before this, but were looking for something that would make a difference.
"It was 2001 and we sat down at a kitchen table and thought it out," Poole says. They formed a team of nine (eight remain) that funded the company for 18 months before raising $6 million from venture capital investors, including Intel Capital. They received a second tranche of $8 million in 2005 to bring the business to scale.
Mistakes were made. They had already spent about $1.5 million of the initial investment before they realised the technology wasn't working correctly.
Reluctantly, they went back to the drawing board. "Persuading the investors to keep backing us, even though we'd 'wasted' $1.5 million of their initial investment, was one of those company-defining moments," Poole says. "You don't want to do that too often."
They planned to have the optical switching devices made overseas, but could not find the required technical skills.
"We worked out that manufacturing the high-end part of the device was better here, while the easier parts, such as the metal housing and the simple optical sub-assemblies, was best done in China," Poole says.
Poole is adamant Australia is a viable place to manufacture sophisticated technology. It's not demonstrably more expensive to make high-tech equipment here. It's the simpler, more labour-intensive functions that are more cost-effective elsewhere. "In terms of labour costs, it's about 10 times less expensive in China," he says.
Finisar has expanded its team to about 280 and has exported more than $200 million worth of state-of-the-art fibre-optic devices from its base in Waterloo, in inner Sydney.
Its clients include some of the leading telecommunications manufacturers. Finisar has close to 40 per cent of the world market - shared mostly with JDS Uniphase, which designed an alternative device about the same time.
The company is now a wholly owned subsidiary of Finisar in the US, but the technology and know-how remains Australian, as do the export dollars earned.
Poole says the US buyout was almost inevitable for the team to take the technology to the world.
Poole laughs at the comparison often made between his kind of technology and the software apps that seem to be sprouting like mushrooms and can be up and running and monetised in months. "Yes, we're a bit of dinosaur. It took our technology about five years to be ready for the market," he says.
But he says his company's technology sits in a "more defensible" long-term position. It can't be changed overnight.
"We focus on hardware. That was where we felt there was a value-added business. There's a lot more patience required, but get it right and the benefits can be enormous."