Description
Published June 4, 2020. 30 pages
Ciena is at an important inflection point involving its future strategy. Its biggest, near-term struggle right now seems to be in adequately responding to the demands of the hyperscale data center operators for a 400-gig ZR device, the total world market we project to grow to $175 million in 2023. Is there a possibility that the supplier remains primarily focused on its latest generation of equipment mainly involving 800G, 600G, etc.? Conversely, does it indeed make a dramatic shift with a full commitment towards pluggable coherent optics? Most ominously, future types of modules along with white boxes taking advantage of them could lead to substantial cannibalization of not only Ciena’s offerings, but every full optical system player in this space.
Otherwise, despite some notable, very costly missteps earlier in its existence, Ciena at least for now, is at its strongest competitive position ever as an optical system house. Bolstered by its dominant position in the United States, especially with the hyperscalers and large incumbent ISPs, it has become the world leader outside of China. While this transport space is quite harsh, as maintaining adequate hardware differentiation can be difficult, the vendor should be able to exist indefinitely. We also provide a set of circumstances in this report, which would result in Ciena remaining in its dominant place, primarily as a full-system supplier moving forward.
The report addresses the following issues:
- 400ZR market size and projections by application out to 2024
- expected 400ZR price declines by app
- Ciena’s corporate strategy options in optics
- competitive analysis of major competitors
- long-term outlook of large cloud providers and other users
- special focus on Microsoft’s network plans, as original ZR driver
- cloud operators’ demands for successive generations of gear
- enhanced risk of significant, lengthy network failures
- power requirements at higher data rates
- Ciena’s possible M&A activity
- bandwidth demand challenges with Covid-19 virus
- decision-making structure at Ciena and potential changes
- QSFP-DD vs OSFP
- 400ZR+ and its complexity
- impact of white boxes
- future potential for 100ZR
- prospects for 800-gig ZR
- Google’s campus coherent concept
