It looks as if Cisco Systems Inc. (Nasdaq: CSCO) may regret claiming ownership of the North American OC48 transport market.
Earlier this week, the vendor announced that figures from market research firm RHK Inc. show it to have "captured the number one position in the North American market for OC48 long-haul SONET transport."
Ironically, by claiming to be first in OC48 long haul, Cisco caused some confusion. By its own admission, the Cisco ONS 15454 is not truly a long-haul product, but instead is used to aggregate OC48 connections at the edge of the network and feed them to the core.
By touting its presence in the long-haul space, Cisco only called attention to its continuing lack of OC192 support there, since OC192 is the bigger and faster-growing segment in the long-haul market (see Sonet: Who's Ahead in Long Haul?).
Cisco also inadvertently focused all eyes on the overwhelming dominance of the OC192 market leader -- Nortel Networks Corp. (NYSE/Toronto: NT)
Further, figures for the North American Metro Sonet market just released by RHK show that Cisco's running a distant fourth there with the ONS 15454:
RHK's figures also indicate Cisco's far from first in OC48 in the metro space. Indeed, it is fourth there too. Fujitsu Ltd. (KLS: FUJI.KL) is by far the dominant player.
Cisco's not present at all in metro OC192, RHK says -- although analysts believe that's not a drawback in the metro market. "OC48 will still dominate the metro market in 2004," says Brian Van Steen, WDM and optical networks analyst.
The real isse here guys is that the OC-48 network element window is almost closed. Nortel may never make another - in a matter of speaking. What Cisco has done is grab the last peice of Nortel's market share in OC-48. (OK and what little there was for Fuji too.) That market is shrinking fast and you will see very little of it in 2002. Nortel owns OC-192 for now, but even that is closing.
Its time for the true next gen products folks - and only Ciena and Corvis are in position here. (There are a few others, but Nortel and Cisco are not them!) Nortel and Cisco are at least 6 months behind in this next product/application cycle. In some cases, over a year behind. Will that matter? Who knows. With this slow economy, it may not matter.
If that's the point, then they are in a very shaky position for sure.
As for penetration, its all in how you look at it. 15% growth in optical is huge and to gain a 14%(?) slice in 2 years is significant. But its no longer a next gen slice. It was a next gen OC-48 slice. Next gen optical is no longer defined by dense OC-48 Sonet boxes - that window is almost gone. Its now defined by core switches, multi-service platforms, (which the Cisco is not yet), photonic switches, and ultra long haul devices.
You all know my love for Cisco is next to our love for untruthful presidents, but I will admit that they have done admirably of late. However, I attribute that more to the Cerent breed since their optical business is a seperate business unit altogether. It doesn't have that Cisco flavour. Its like Clinton taking credit for the economy when it was good.
Cisco will fair well if they can get those new next gen boxes afloat quickly. Their past success was based on new paradigms and being first-to-market with them. They have neither of these going for them in the next round.
To this date, Cisco has not penetrated any significant long haul markets/applications with their optical products. None. Notta. This is a huge gaff and worthy of a public flogging. Its typical Cisco smack and lies that need to be quelled. In fact, its quite laughable as the industry well knows.
Cisco has made a good penetration into some metro market segments, but in general, its product will not stand the test of time unless that "backplane upgrade to OC-192" happens. Right - no service interuption. And their amp story is weak at best. Next gen OC-48 was their claim to fame and that window is closing fast. They need to get some of these other products afloat fast if they are going to stay in this arena.
This is the year of the core switch folks. Its the year for Ciena. Its the year of the Raman amplifier. Its the year for Corvis (hopefully, finally). Cisco is going to suck wind and Nortel is going to flounder a bit. Don't look for Cisco or Nortel to be at the leading edge with first-to-market anything this year.
"...Cisco has some great optical technology. But to date, they have made VERY LITTLE penetration into the optical space over one day, one month, or one year, in spite of Monterey, Pirelli DWDM piece, etc.... That is UNDISPUTED..."
Again are we talking penetration in next generation SONET, or legacy SONET deployments?
Cisco never intended to compete with incumbents in old legacy SONET installations, that would be as insane as them going head to head against Lucent and Nortel in PBX deployments.
The Cisco's strategy is establishing themselves a strong market share position in emerging optical transport technologies and they've done this with the Cerent platform. We'll just have to wait longer to see how things shake out with their other optical aquisitions, but that's not the topic of this discussion....
I think LR did an excellent job interpreting the smoke and mirrors. You do have to read both the first and second cut of the article. Don't expect to have your hand held on this site. Plus the reader feedback is worth as much as the original articles.
If you want your info spoon fed and politically correct, read business week or herring.
I agree to some extent but what you have just done is gone and lumped all the new stuff in with the old - again.
To penetrate into a market you need to have these things to succeed: - a market (very important and often overlooked for the Tellium, Xros, Monterey arena) - a product (this one sorts itself out) - a better than good business case to make it all happen (reflection of your product and the market)
If you like to point at big pies and fat market shares from products that are previous generation then go ahead, there are a lot of other vendors who are trying to do exactly like Sycamore, Alidian, Chromatis (before they got eaten) etc. and they also know yesterdays numbers don't count for anything...
Can't wait for the analyst (or vendor) who decides 10GigE over DWDM is a "new" market segment (could hardly call it SONET now could you??). Watch Nortel defend that one...
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