Start-up Celox folds

The cap that carriers have put on equipment spending has claimed another victim: Celox Networks, a well-funded start-up making an IP services switch.

The company tore down its Web page this week, leaving only a message blaming carrier cutbacks for derailing the company’s business plans. Celox was keying on large carriers to buy its SCx 192 switch as they shifted their voice networks to IP-based voice-and-data networks, but these are the same carriers that are slowing their transition plans.

“We regret to announce that as of December 18, 2002, Celox Networks has suspended operations and has begun the process of permanently closing the business,” the lone remaining page of the Web site says. “It had become increasingly clear that carrier CapEx spending would not return in the foreseeable future. As a result, we could not reasonably expect to execute on our business plan.”

Early on, Celox acknowledged it was hoping AT&T Broadband would become a customer, but it now looks like Comcast will be buying up AT&T Broadband.

Celox’s competitors include Nortel and Lucent, both of which have vast resources to fall back on as they wait for spending in telecommunications to pick up.

A year-and-a-half ago, the company was riding high on being able to land renewed funding in the earlier stages of the telecom slump.

“Our focus on Tier 1 carriers is one of the reasons we were able to get such a large round of funding during this downturn,” John Rogers, CTO for Celox, said at the time. The company had just secured $80 million.

But even then, it was clear that more funding would be difficult. “We spent three times the effort to get our third round of funding as opposed to the other two,” he said then.

In an effort to make the money last, the company last year laid off 65 workers out of 285. It said then that six potential customers that were testing the SCx 192 box were taking longer to decide whether to buy; apparently they took too long. 

Celox SCx 192 devices were designed for large service provider points of presence and aggregate traffic coming in from various service termination devices such as DSL access multiplexers and frame relay switches. The devices would prioritize the traffic and pass it into the core of provider networks after imposing features such as service quality and encryption, for example.