InPhase lays off 60 employees

Nine years ago this week, a spin-off from Bell Labs settled in Longmont with the intention of commercially proving its breakthroughs in holographic memory technologies.

During the coming years, InPhase Technologies grew in size and potential, raising upward of $100 million in funding for development of its fast, high-capacity holographic data storage disks. Five years ago, the company’s CEO said that by 2010, the firm would launch another generation of its disks with capacities around 1.6 terabytes.

Actions taken this week, however, are putting that and other promises in jeopardy.

Earlier this week, InPhase officials laid off the company’s 60 employees — who had taken significant pay cuts in the previous months — and closed the office after running short of funds, said Bart Stuck, an InPhase investor who said he has been involved with the company since 1996.

Stuck said the company is not dead.

“We’re actively engaged,” said Stuck, managing partner for venture capital firm Signal Lake. “We’re trying to restructure the company, and we think there is a lot of promise there, and are working this thing through with the people there that hold the majority of the stock of the company.”

Stuck said it should be a matter of “days,” not weeks or months, that a resolution could be reached.

If that is the case, officials would work to rehire employees and keep the company in Longmont, he said.

Nelson Diaz, InPhase’s chief executive officer, could not be reached for comment.

One of InPhase’s engineers was quoted in the Longmont Times-Call earlier this week that he and his colleagues worked for a year on “minimum wage for salaried employees,” according to the newspaper. The unnamed employee said he was being paid $11 per hour, according to the Times-Call report.

InPhase’s closure comes nearly two months after Copan Systems, another Longmont-based data storage company, was reported as laying off the majority of its work force and shutting down.

Researchers at the Bell Laboratories of the New Jersey-based Lucent Technologies developed the holographic technology behind InPhase’s beta data storage products in 1968. Efforts to further develop the technology intensified in 1993, Diaz told the Camera in 2001.

InPhase planned to use holography to record and store data on the surfaces and through the volume of disks similar in size to DVDs and CDs.

The highly specialized technology most likely didn’t catch on with the enterprise and IT markets because of the economics associated with implementation, said Brian Babineau, a Silicon Valley-based senior consulting analyst with the Enterprise Strategy Group.

Traditional mechanical disk drives have continued to decrease in price, plus numbers of systems are built around specific mechanical drive interfaces, he said.

“This was going to require a significant change in technology consumption and storage consumption and the economic benefits aren’t that compelling,” he said. “You have to buy their system in order to run, essentially, their holographic storage drives or media…

“It’s not ubiquitous, and when you’re competing against a familiar commodity product in a mechanical disk drive, you need ubiquity.”

Babineau added that he sees InPhase’s best chances for survival to be if the firm positioned itself a supplier to a market other than enterprise data storage.