Interest by Cisco, Hughes, Verizon & Others in Rivulet is Notable

Implications: 1.      Rivulet plays in the very large space of where real-time video and high-quality video intersect.   2.      The supplier has kind of a happy problem of avoiding biting off more than it can chew. 3.      While the attention Rivulet is receiving from some telecom powerhouses is impressive, it is quite possible that any potentially large future achievements might be accomplished in other markets.

Analysis: New CEO of Rivulet, Ed Kennedy, has brought back several of the key executives that were part of the Ocular startup that was ultimately purchased by Tellabs.  With a team that has already successfully worked together, it arguably has the feel of a 10-year startup – despite having been founded only in 2003.  Earlier, Rivulet was really a technology-driven company that needed a talented group of people to jump-start it toward a focus on commercialization.  

The parallels between Rivulet and the old Ocular are striking.  One of them is the idea of solving a present problem within an existing infrastructure – it is not necessary to bolt on new and unfamiliar elements.  There is the practical (and refreshing for newcomers) approach of increasing chances for success by avoiding the reinvention of the wheel as well as staying away from bleeding-edge solutions.  In addition, there are very disciplined processes in place at Rivulet to first get sufficient critical mass in very specific applications– in order to attain some additional market validation as well as derive some near-terms revenue -- and eventually transition toward targeting strategic markets for large-scale production. 

Rivulet’s core technology is what it calls dynamic synchronization, which is a fancy marketing term for providing a TDM virtual wire for an IP network.  There have certainly been many success stories over time in telecom in applying a new twist on an older, formerly ubiquitous technology to better enable a state-of-the-art one.  In fact, Rivulet uses TDM as part of a unique approach to accomplish what others are doing to increase the efficiency and quality of video transmission – and in fact complements existing techniques including compression, forward-error correction, shaping, streaming, and buffering.  

Rivulet’s essential pitch involves a lot of the delay issues that come at Layer 3 in the buffers in the routers.  Without ever touching those routers, the supplier offers a solution that synchronizes the routing queues at the end points for scalability.  It gets rid of jitter and latency problems that arise from the buffer queue overflows.  Rivulet asserts that tests have shown that bit errors which would normally be at 10-3 to10 -4 go all the way up 10-10- to 10-12 -- approaching the level in the optical plane -- achieving bandwidth utilizations up over 90 percent.  The vendor points to conventional transmission involving tele-presence where a lot of times the real-time traffic has to be below 30% as a percentage of the overall traffic.  

With the explosion of demand for super-high resolution video in the medical arena, Rivulet has made this space a key market focus. Sloan-Kettering has connected about 15 operating rooms -- with the newcomer’s technology having been used in thousands of surgeries.   These high-quality videos can be archived and played back on a PC.    The initial thinking at Rivulet was that the medical sector would probably be a transitory market and then it would go after potentially bigger opportunities such as in the government/military and/or in financial markets.  However, the vendor has found that the more it parses the medical domain up -- there is a gigantic amount of investment being made there. 

Another possible targeted area for Rivulet getting the benefits of a TDM-like solution over an IP network includes wireless backhaul  But with management’s extensive backgrounds in the service provider vertical, there is a natural reluctance to get too deep into these networks in general because it could get caught in there for years without the assurance of an adequate return. The RBOCs are only really amenable to buying from large, established companies.  An even worse problem is that telcos have so much power these days over the vast number of vendors that have been consolidated -- they can commoditize the technology before it even takes off. 

Optimally, the way to go in the carrier space would be to get its solution implemented in a software stack in another manufacturer’s product -- putting back pressure through the carriers on their network integrators to make that happen.  However, it is well understood that dealing with a large vendor can be a black whole as well in terms of the risk of spending years in development.  Not too mention how hard it is to get to a person enabled to pull the trigger on such a deal.

The government space in general is very enticing from a business perspective to Rivulet because once the product becomes well liked, the whole situation becomes akin to an annuity – with the huge applicability.   

Ocular effectively repositioned its product in the high-density optical market.  Rivulet faces a similar challenge in picking its shots carefully.