Michael Howard, co-founder and principal analyst at the Silicon Valley market-research firm Infonetics Research, said Xtera plays in a roughly $15 billion industry, though its market share is only in the single digits.

“Xtera is one of the smaller players,” he said. “They’ve been around a long time and proven themselves.”

But he noted that most every big maker of telecom gear, from Alcatel-Lucent to Nokia Siemens Networks to Ericsson, also plays in that sandbox.

“You name any telecom-equipment provider of any size, and they’re in this game,” Howard said. “The difference for Xtera is they specialize in optical equipment, whereas most of the large companies have a mix of products beyond optical.”

But in the telecom-equipment market, size matters. Dallas-based AT&T Inc., for instance, earlier this year unveiled an overhaul of how it chooses and works with technology vendors for its network. The company set up eight “domains,” or areas of its next-generation network, such as wireline access. AT&T has said it will work with two vendors per domain, sharing more information with those suppliers, and in a closer relationship, than had previously been the norm.

The net result: Those vendors will tend to be large and will get some cutting-edge technology from smaller suppliers. The domain vendors will in turn supply their smaller partners’ technology to AT&T, rather than AT&T having to buy the smaller suppliers’ wares directly.

“They are no longer going to buy equipment from anybody except those (domain suppliers), period,” said Barbara Lancaster, president of LTC International, a Richardson telecom consultancy. To get an “in” with the likes of an AT&T, she said, “Xtera will have to have a deal with somebody.”

Howard said he thinks that Xtera will eventually partner or merge with a bigger player to help get the size it needs to compete with the big boys.

“I suspect over time that would happen, yes,” he said.