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Will Cisco Systems Rule DCI Market?

December, 2015

When Cisco Systems recently published the specifications of its Network Convergence System 1002 (NCS 1002), it theoretically could be called a Data Center Interconnection (DCI) “killer,” but only for a few of the high-end content service providers, which are heavily involved with 100G. Yet shortly afterwards, Coriant announced its Groove G30 platform, which it also characterizes as “game-changing,” and according to its specs, will offer a similar capacity density, as well as comparable inputs and outputs. Nevertheless, for 10G and 40G clients, which represents the vast majority of the rest of the DCI business, the advantages for both companies over other vendors is, practically speaking, negligible or non-existent. (Furthermore, on longer spans beyond the capability of 16-QAM and 250-gig per channel, Fujitsu Network Communications' 1FINITY T100, along with the G30, offer the same density ...

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Coriant: Market Perils on Investment in Distressed Assets

December, 2015

There can be a fundamental problem when private equity firms buy up companies in a depressed condition in that the overwhelming desire to sell off those assets at the most favorable valuations can be in conflict with the best interests of the market, especially when the overall space is not that healthy. In the case of Coriant, it is one thing if it is a relatively quiet participant in striving to accommodate “third party [O]pen [L]ine [S]ystems” (OLSs), it is quite another to be an extremely aggressive cheerleader in order to possibly increase relatively short-term revenue, because at least on its face, it is not in the best long-term interest of the rest of the transport suppliers (as we pointed out in a recent article). While we continue to believe there will be hurdles in moving to OLS on the public network side, we have found out that this activity has started already in the Data Ce ...

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Reactions to Ciena Based on Elusive Credibility Factor?

December, 2015

A recent blog article on Light Reading gets into whether the initial backlash on the Street against Ciena was justified based on the past quarterly results as well as on the projected performance of the vendor. In our opinion, and as we have discussed in the past, despite rather exemplary leadership on the technology portion of the company over the years, it has been held hostage for a very long time by management on the financial and marketing sides of the business with a shockingly insufficient amount of intimacy with the optical industry. We also believe that there is a serious tone-deafness when it comes to its interactions with the investment community, such as in inadequately addressing the “severe deceleration in growth rate” in its core business over about the last four years on the past earnings call. Finally, there are the “rookie” kinds of mistakes regarding strategic decision ...

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Acacia Communications IPO: A Compelling Story?

January, 2016

The optical industry was standing by for Acacia Communications’ S-1 for a lengthy amount of time, and there had been some recent conjecturing that it may not happen at all. The stakes were clearly high in that it appears to have been the only VC-backed 100G firm. While Acacia has made impressive penetration into the market with superior DSP technology, the question surrounds what it can do for an encore that would be good enough to attract investors in a meaningful way on Wall Street. Certainly, the process in Acacia going public was hardly done with a lot of fanfare, reflecting the current relatively low number of IPOs occurring in the technology sector in general, and the close to non-existent activity in the fiber optic space. The vendor had filed confidentially back in August (actually a common practice now for all companies with yearly revenues of less than a $1 billion). Then, very ...

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Infinera’s PIC Challenge

January, 2016

Although Infinera has always touted its unique Photonic Integrated Circuit (PIC) technology as a major differentiator in the optical systems market, any advantages to this approach in the past have perhaps been totally countered by its limitations. Even today, the vendor’s ties to PICs are leading to constraints in the Data Center Interconnect (DCI) space because it appears that it prevents the development of higher-density offerings in smaller form factors, which have been enabled through the use of Acacia Communications’ 400G chip set. Also, while the necessity for 64QAM is terribly far out into the future, we think it is possible that a plateau has been hit with Infinera not being able to go beyond 8QAM and 16QAM with Indium Phosphide-based componentry to achieve a single 400G channel or a 1-terabit PIC. The major players providing long-haul transport systems are talking about moving ...

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