& cplSiteName &

Ciena, Ericsson Embark on SDN, Optical Love Affair

Ray Le Maistre
2/14/2014
50%
50%

If you're going to get jiggy with a new close friend, Valentine's Day is as good a time as any to start, right?

That's why it's heartwarming that Ciena Corp. (NYSE: CIEN) and Ericsson AB (Nasdaq: ERIC) chose February 14 to announce an optical and software-defined networking (SDN) strategic global agreement that will see the two companies engaged in joint R&D, product integration, and sales channel activities.

The combination is powerful. Ericsson is the leading vendor in mobile network infrastructure and global professional services for the communications service provider (CSP) sector, while Ciena is one of the leading optical transport vendors with a strong position in the all-important 100G systems market and a solid customer base, particularly in North America. (See The Optical Market: A Health Check .)

So what have they agreed? Well, they are going to jointly develop "transport solutions for IP-optical convergence" and SDN. In addition, Ericsson is going to sell Ciena's Converged Packet Optical products, including the 6500 Packet-Optical system, which is Ciena's key 40G, 100G (and in the future 400G) platform, and the smaller 5400 family. (See Ciena Goes Packet-Happy in the Metro.)

That's interesting news for a number of reasons: Ericsson has its own optical platform business already, so this is an intriguing development for the transport equipment market. It's also an interesting combination for the SDN sector, for the global CSP market and for Ciena and Ericsson's existing customers and rivals such as Alcatel-Lucent (NYSE: ALU), Cisco Systems Inc. (Nasdaq: CSCO), Huawei Technologies Co. Ltd. , Infinera Corp. (Nasdaq: INFN), and Nokia Networks , as it gives Ericsson a stronger play in packet/optical and Ciena an established IP partner. (See Ericsson Unveils Network Processor and Ericsson Unveils New Router.)

"Given the competitive relationship in optical, this announcement is definitely a bit of a shock, particularly from the Ericsson side," notes Heavy Reading senior analyst Sterling Perrin.

"Ciena has been having a great run in optics with its leadership position in 100G and also with switched OTN, but Ciena's glaring hole in transport is the lack of IP routing expertise. As IP and optical convergence becomes more than just a buzzword, it does put pressure on Ciena to make a move into routing, and this appears to be at least a first step. Alcatel-Lucent, Cisco, and Huawei all have IP and optical development already. The interesting thing though is so does Ericsson!" adds Perrin.

He continues: "The question is what does this mean for Ericsson's in-house optical transport products and team? With 100G being overcrowded, it could make sense for Ericsson to exit at least the 100G side of transport and focus its resources on IP development." At the same time, though, Ericsson has had success in the metro packet/optical market with its SPO 1400 line, adds the analyst.

"So, it looks like some good benefits for Ciena but it's raising a lot of questions about Ericsson's plans and strategy for optical transport," concludes Perrin.

All about focus
Ericsson says it's not abandoning anything, but is instead becoming more focused.

"We are not shutting anything down. We will meet all customer commitments and maintain our portfolio. The agreement with Ciena enhances our portfolio options," Jan Häglund, Ericsson's head of IP and Broadband, tells Light Reading. "We will continue to invest but now we can focus our investments and prioritize in a smart way on IP and service provider SDN, with Ciena as our preferred option for packet/optical."

What does this mean for Ericsson's optical customers, such as Telstra Corp. Ltd. (ASX: TLS; NZK: TLS)? Will they find themselves forced to take Ciena systems when it comes to their next upgrade cycle? (See Telstra Sticks With Ericsson for 100G.)

"The agreement allows our customers to select products from the Ciena portfolio. Each customer will be able to make their own decisions, whatever suits them," says the Ericsson man.

In terms of joint development and product integration, work will start on that straight away, says Häglund, with Ericsson aiming to integrate Ciena's optical modules on its Smart Services Router (SSR) platform to enable IPoWDM (IP over WDM).

In terms of SDN capabilities, "both companies are committed to open control of the IP and optical network elements. Ericsson has been working on the development of its IP platform, while Ciena brings expertise in the packet/optical domain. We will build on our involvement in OpenDaylight -- that is the basis for this joint development." (See Ericsson Balances 'Open' Future, Legacy Past, Ericsson Launches OpenDaylight Lab, and Ericsson's Network Slicing: It's Far Out, Man.)

Häglund said the new partners have R&D investment plans but they are not sharing them publicly.

How did the relationship come about? Is this agreement the result of customer pressure or did they meet at an SDN speed-dating party perhaps?

With the evolution towards collapsing network layers and the move to SDN, everyone is evaluating their options about what to do, whether to find a partner or take another route, notes Häglund. "We considered all our strategic options and are very happy with the outcome. This is positive for both companies and for our customers. This is a natural evolution and didn't happen because of any customers. We found each other -- there are only so many combinations that are possible. Obviously Ciena is a very good partner to have as it is in the top three optical companies in the world and the number one in North America and we have tremendous market reach and very strong professional services," added Häglund.

So, they found each other. That's an apposite message on February 14, no?

— Ray Le Maistre, Editor-in-Chief, Light Reading

(4)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
brookseven
100%
0%
brookseven,
User Rank: Light Sabre
2/14/2014 | 12:26:46 PM
Re: Did they swap Valentine's line cards?
Carol,

 

Just a note - ALWAYS negotiate the breakup first.  BD types hate that because they are in the lovey dovey phase of the relationship.  The reality is that at some point the businesses will have separate interests and pursue them separately.  If it is not planned for well, then the breakup is ugly.

There is more than optical overlap here (see WWP) and given's Cyan's trouble this bodes poorly for them.  I was thinking that Ciena might be a good acquirer of Cyan.  Given that OPEX for them is (on today's trajectory) going to exceed Revenue then they need to find a buyer before Marlin scoops them up.

seven

 
Carol Wilson
50%
50%
Carol Wilson,
User Rank: Blogger
2/14/2014 | 11:04:11 AM
Re: Did they swap Valentine's line cards?
I think this could be a powerhouse match-up, but like most marriages, it will come down to the chemisty. Are these guys hooked up for the long-haul? 

Each has been smart in its own segment, but whether they can truly marry those strengths -- that requires an ambitious level of commitment.

 
DOShea
0%
100%
DOShea,
User Rank: Blogger
2/14/2014 | 8:03:43 AM
Re: Did they swap Valentine's line cards?
Given some of the optical redundancy, I'll bet this was very much SDN-driven--two major players getting together to look at how networks will be designed and built in the future. Maybe they just said, "Let's not worry about where we have optical overlap--the future is bigger than that."

But on the optical front, the sizes and market reaches of Ciena's competitors, it also looks like a lot of potential optical market benefit for Ciena here.
Ray@LR
100%
0%
Ray@LR,
User Rank: Blogger
2/14/2014 | 7:30:46 AM
Did they swap Valentine's line cards?
OK, enough of the Feb 14 tomfoolery....

This is a very interesting combination indede - if Ciena and Ericsson can find real cultural harmony this could work out.

Ericsson has been working hard on NFV and positioning its SSR for SDN architectures -- can Ciena bring enough to the table in SDN to make this a "more than the sum of their parts" relationship?

You can imagine how ALU, Huawei, Infinera, NSN, Coriant, ZTE etc etc will be talking about this today....
From The Founder
The independent evaluation of Nokia's key virtual network functions (VNFs) was a defining moment for the Finnish giant.
Flash Poll
Live Streaming Video
Charting the CSP’s Future
Six different communications service providers join to debate their visions of the future CSP, following a landmark presentation from AT&T on its massive virtualization efforts and a look back on where the telecom industry has been and where it’s going from two industry veterans.
LRTV Custom TV
Cisco's Innovations in Cable

5|26|16   |   03:18   |   (0) comments


Marc Aldrich from Cisco discusses the latest in security, the evolution and momentum for CCAP and what the industry will be seeing next from Cisco.
LRTV Documentaries
Leading Lights 2016 Highlights

5|25|16   |   02:26   |   (1) comment


Some of the high points from this year's Leading Lights awards dinner at the Hotel Ella in Austin, Texas.
LRTV Documentaries
Light Reading Hall of Fame 2016

5|23|16   |   05:43   |   (0) comments


Find out who has been welcomed into Light Reading's Hall of Fame this year.
LRTV Custom TV
ZTE TM Forum Highlights

5|23|16   |     |   (0) comments


ZTE showcased its new ICT solutions at TM Forum in Nice.
LRTV Interviews
Gamma's MD on the Emergence of UC2

5|20|16   |     |   (0) comments


Gamma Communications Managing Director David Macfarlane believes the unified communications (UC) market has reached a tipping point.
LRTV Custom TV
The Ultimate 5-Minute Guide to Digital Customer Engagement

5|20|16   |     |   (0) comments


In this short video, you will hear all about how Digital Customer Engagement is the key to meeting customer expectations, keeping them happy, and maximizing revenue. VP Product & Marketing at Pontis, Ofer Razon, breaks down for us the five essential capabilities for successful Digital Customer Engagement. Don’t miss!
LRTV Custom TV
NFV in 2016: Part 1 – NFV Use Cases Get Real

5|19|16   |   05:57   |   (0) comments


Consensus is building around the key use cases for NFV, including managed IP services at the network edge and on customer premises, which can generate new revenues from enterprises/SMBs and consumers; Evolved Packet Core to support LTE migration; and adjacent technologies, such as TAS and IMS, to support VoLTE and next-generation charging and policy control ...
LRTV Custom TV
Nokia's Steve Vogelsang on NFV – Part 3

5|19|16   |     |   (0) comments


Steve Vogelsang discusses the challenges of operational transformation and how Nokia helps its customers. Join Steve at the Big Communications Event in Austin the morning of May 24, on his keynote and optical networking panel.
LRTV Interviews
Level 3: Why UC Is In Demand

5|17|16   |   04:12   |   (1) comment


Andrew Edison, Level 3's senior VP of sales, EMEA region, talks about the drivers of growth in the unified communications services market.
LRTV Custom TV
ARM's OPNFV Action

5|17|16   |     |   (0) comments


At the ARM booth at MWC 2016, Joe Kidder and Bob Monkman speak to Light Reading about OPNFV and their upcoming action.
LRTV Custom TV
Nokia's Steve Vogelsang on NFV – Part 2

5|16|16   |     |   (0) comments


Steve Vogelsang gives advice to service providers on how to move to NFV. Join Steve at the Big Communications Event in Austin the morning of May 24, on his keynote and optical networking panel.
LRTV Interviews
Interoute CTO on NFV's Maturity

5|13|16   |   06:46   |   (1) comment


Matt Finnie, CTO at international operator Interoute, explains how NFV has made life easier in terms of logistics and how Interoute can now enable a 'software-defined moment' for its customers.
Upcoming Live Events
September 13-14, 2016, The Curtis Hotel, Denver, CO
December 6-8, 2016,
June 16-18, 2017, Austin Convention Center, Austin, TX
All Upcoming Live Events
Infographics
A new survey conducted by Heavy Reading and TM Forum shows that CSPs around the world see the move to digital operations as a necessary part of their overall virtualization strategies.
Hot Topics
DT: Telcos Must Escape Vendor Prison
Iain Morris, News Editor, 5/24/2016
AT&T to Start 5G 'Friendly' Trial by 2016 End
Dan Jones, Mobile Editor, 5/24/2016
Cisco's Patel Hails 'Microculture' Successes
Iain Morris, News Editor, 5/26/2016
Cable Is Eyeing Its Retail Options
Mari Silbey, Senior Editor, Cable/Video, 5/25/2016
AT&T's Margaret Chiosi Retires
Ray Le Maistre, Editor-in-chief, 5/25/2016
Like Us on Facebook
Twitter Feed
BETWEEN THE CEOs - Executive Interviews
In this latest installment of the CEO Chat series, Craig Labovitz, co-founder and CEO of Deepfield, sits down with Light Reading's Steve Saunders in Light Reading's New York City office to discuss how Deepfield fits in with the big data trend and more.
Grant van Rooyen, president and CEO of Cologix, sits down with Steve Saunders, founder and CEO of Light Reading, in the vendor's New Jersey facility to offer an inside look at the company's success story and discuss the importance of security in the telecom industry.
Animals with Phones
Live Digital Audio

Our world has evolved through innovation from the Industrial Revolution of the 1740s to the information age, and it is now entering the Fourth Industrial Revolution, driven by technology. Technology is driving a paradigm shift in the way digital solutions deliver a connected world, changing the way we live, communicate and provide solutions. It can have a powerful impact on how we tackle some of the world’s most pressing problems. In this radio show, Caroline Dowling, President of Communications Infrastructure & Enterprise Computing at Flex, will join Women in Comms Director Sarah Thomas to discuss the impact technology has on society and how it can be a game-changer across the globe; improving lives and creating a smarter world. Dowling, a Cork, Ireland, native and graduate of Harvard Business School's Advanced Management Program, will also discuss her experience managing an international team focused on innovation in an age of high-speed change.