As it turns out, rumors of the demise of Cisco Systems Inc.'s (Nasdaq: CSCO) optical core router were not greatly exaggerated (see Cisco Preps New Optical Switch ).

Cisco confirmed today that it's discontinuing its ONS 15900 Wavelength Router product, which it acquired when it bought Monterey Networks in a stock deal worth about $500 million in August 1999.

"There's not a replacement for it currently," says Cisco's optical boss, Carl Russo. "We found that the marketplace it was addressing was very slow to take off. So we're going to stand down and watch this market. When we see it start to take off again, we'll make a re-entry decision at that point."

That could be some time. It is currently estimated that there are fewer than 100 service-provider facilities in North America that could take advantage of a product as large as the Monterey device.

While Cisco says it still believes that a mesh architecture in the network's core is the way to go, the capital spending crunch is forcing it to retrench and throw its weight behind the metropolitan market, where it already has a foothold.

"Most [service providers] are coming to the conclusion that they've got core networks. What they don't have is a way to get enough traffic onto them," Russo says.

Just how extensive an effect this product's demise will have on Cisco remains to be seen. Cisco hasn't yet addressed what it will do with the inventory for the wavelength router or whether that glut will result in a charge against earnings.

Also, the effect that the cancelled product will have on the optical components firms that supported it is unknown. “When we made a decision to discontinue the product, we chose not to wait until we had all the answers because we felt it was material enough that it should be out in the public domain,” Russo says.

"We're going to be redeploying and belt tightening, and it's not clear how all this will shake out. But our first concern is to get the talent base reassigned to those projects that make sense."

Russo says that about 200 employees will be reassigned and Cisco will also work to help the customers that have already bought the ONS 15900. “We're going to work with our customers to make them whole and help them along. That work has just started so I don't know how that's going to sort out,” Russo says.

In September 2000, Cisco said that one large carrier, WorldCom Inc. (Nasdaq: WCOM), had completed its initial phase of testing for the ONS 15900 and one startup carrier, Petronet Corp., was testing the product. In November 2000, Cisco announced that the first “paying customer” for the hulking box would be Cambrian Communications LLC, a Fairfax, Virginia-based carrier's carrier whose purchase Cisco helped finance (see Cisco Plods Toward Optical Portfolio).

By sending its optical router to the glue factory, Cisco cedes that part of the optical battle to Tellium Inc., Ciena Corp. (Nasdaq: CIEN), and others. However, Cisco will remain in the core DWDM market with its ONS 15800 products. "We have over 20 customers for the 15800 series, so I'm pretty excited about what I'm seeing there," Russo says.

- Phil Harvey, Senior Editor, Light Reading http://www.lightreading.com