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Parama and PMC-Sierra prep integrated chips that could reduce add/drop multiplexer costs to less than $5,000

ADMs Get Smaller, Cheaper

Light Reading
Supercomm News Analysis
Light Reading
6/14/2004
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Chipmakers Parama Networks Inc. and PMC-Sierra Inc. (Nasdaq: PMCS) are compacting the functions of add/drop multiplexers (ADMs) onto single chips, aiming to catalyze a generation of lower-cost systems.

Working on the low end, PMC-Sierra today announced a $300 chip that could bring a pizza-box-sized ADM's price to the range of $3,000 to $5,000. Parama, likewise, is continuing to tout its own ADM-on-a-chip and a $5,000 system price, although the company has its eye on higher-end systems than does PMC. Parama will be showing its chips at Supercomm next week.

According to Parama CEO Hemant Bheda, the driver for single-chip products is the fear of low-cost competition from China, which has led both carriers and equipment vendors to rethink the ADM. That's not why Parama got started -- the company originally wanted to develop an entire system though it now sells only chips -- but it's pointing ADM vendors towards the chip camp, he says.

The most ambitious project along those lines comes from Infinera Inc., which recently revealed details of a chip combining ADM functions with WDM optics (see Infinera Declares WDM War). Parama and PMC-Sierra are taking a more down-to-earth approach, coalescing the add/drop functions onto a chip but leaving the optics -- WDM or otherwise -- up to the equipment vendor.

Parama introduced two chips in January, a lower-end device for OC3 and OC12 speeds and a second chip targeting interfaces up to OC768 (see Parama Intros 'ADM on a Chip'). The latter is a bit starry-eyed but helps draw in customers. "They want to see [the chip family] scale from OC48 up to multiple OC192s and, sometime in the future, to OC768," Bheda says.

Bolstering its low-end pitch, Parama today announced interoperability with Finisar Corp.'s (Nasdaq: FNSR) configurable optics, which can be altered in software to provide OC3, OC12, or Gigabit Ethernet interfaces. "If an OEM were to take these two and install them in a system, they could have completely software-configurable line rates," Bheda says. (See Parama Intros 'ADM on a Chip' and Parama & Finisar Intro Sonet/SDH Chips.)

Parama's chips are sampling, with general availability slated for July. Two ADM vendors are using Parama's chip and its reference designs to develop products that could surface within six months, Bheda says.

Unlike Parama, PMC is sticking to line speeds of OC12 and below with its ADM 622 family of chips. "Count the number of 10-Gbit/s rings around the world today: That's not where the money is," says Babak Samimi, product marketing engineer for PMC's service provider division. PMC's target is the pizza-box kind of ADM, a system that might even sit in the basement of an office building.

The PM5337 and PM5338 can handle up to 28 T1 lines and three DS3s. The PM5337 also adds eight ports of up to 1-Gbit/s Ethernet, a concession to a trend PMC sees of vendors "MSPP-izing the ADM, making them data capable," Samimi says, referring to the multiprotocol abilities of multiservice provisioning platforms.

— Craig Matsumoto, Senior Editor, Light Reading

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goundan
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goundan,
User Rank: Light Beer
12/5/2012 | 1:35:20 AM
re: ADMs Get Smaller, Cheaper
EOM
goundan
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goundan,
User Rank: Light Beer
12/5/2012 | 1:35:19 AM
re: ADMs Get Smaller, Cheaper
Latest pricing information from AP. A big french vendor won an ADM deal last week from an AP customer for STM-1 ADMs at $1800 a pop. STM-4 ADMs for $4200 a pop with protection including lasers. Prices are already below the $5K quoted in the article.
Telecommedian
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Telecommedian,
User Rank: Light Beer
12/5/2012 | 1:35:13 AM
re: ADMs Get Smaller, Cheaper
Ah, but read more closely, please. The $5000 pizza box mentioned in the article is an OC-192. That's STM-64 for those of you who speak SDH.

If the big French vendor (and I don't have a Cluseau who that might be with your clever obfuscation) is selling OC-12s for $4200 a pop and the new guys are promising 16 times the speed at $5000, it's a new world order, paradigm, or other politically correct phrase.

And before anyone starts spouting about apples to oranges (or bagels to croissants), yes the OC-192 pizza box doesn't support all of the DS3s and other goodies that the OC-12 probably supports. Each has a place in the network. But if these guys can make an OC-192 for $5000, imagine what's going to happen to the OC-12 market going forward.

Ahh, I can almost smell the bubble rising again. (OK, that's a pretty awful metaphor. Just ignore it.)

TC
PO
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PO,
User Rank: Light Beer
12/5/2012 | 1:35:08 AM
re: ADMs Get Smaller, Cheaper
If the big French vendor (and I don't have a Cluseau who that might be with your clever obfuscation) is selling OC-12s for $4200 a pop and the new guys are promising 16 times the speed at $5000, it's a new world order, paradigm, or other politically correct phrase.

I'll be more interested when the article says that these are the bottom-line prices, rather than a "get me started" price. Are these prices inclusive of all required ancillaries? Or do we add costs for licensing software, management interfaces, specialty cabling, etc, etc on top of these numbers?
particle_man
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particle_man,
User Rank: Light Beer
12/5/2012 | 1:34:59 AM
re: ADMs Get Smaller, Cheaper
What I have heard on the street about the $5K ADM is that the chip vendors are aiming to bring the COGS for the box down to where the OEMs can sell them for $5K and still have decent margin.

I think the competition between the hardware vendors will determine how much they can charge for things like software, cables, and the like.

The whole conversation appears to be happening in the SDH/Asia arena. I wonder if the SONET vendors are paying attention?

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