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Tellabs Sees Progress With 6400

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News Analysis
Light Reading
11/26/2002
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Tellabs Inc. (Nasdaq: TLAB; Frankfurt: BTLA) today acknowledged that it has at least one RBOC trialing its 6400 metro transport switch.

The fact that an incumbent is kicking the tires is good news for Tellabs' optical networking business. Since Tellabs' last earnings call, industry observers have speculated which seven unnamed carriers bought Tellabs 6400 switch last quarter. The company's only announced customer to date is Broadwing Inc. (NYSE: BRW).

The attention around the 6400 switch is merited because the platform is seen as a transition between the large electrical crossconnects of Tellabs' past and the smaller, sleeker optical networking gear of its future.

The 6400's success is also pertinent now that Tellabs is experiencing a pronounced slowdown in its overall business, which would appear even worse had it not been for a recent uptick in 6400 sales. The company has restructured five times since April 2001 and recently reported its first pro forma quarterly loss since 1991. Not only are overall sales declining, but the percentage of its sales from optical networking gear -- a segment that includes the 6400 -- is also slipping.

In the third quarter, Tellabs reported revenues of $288.1 million, with about $115 million, or 39 percent, coming from optical gear (see Tellabs CEO Sees 'Tough Sledding'). During the second quarter, Tellabs' revenues were $345 million with $162 million, or 46 percent, of its revenues coming from optical gear.

However, sales of the two newest optical networking products -- the 6400 and 6500 switches -- accounted for 9 percent of Tellabs' total second-quarter 2002 revenues. So even as the overall picture gets bleak, the company appears to be increasingly betting its future on selling the gear it acquired from Ocular Networks to big carriers.

Tellabs has said the key market for its 6400 is the smaller metro points of presence controlled by big incumbents. The seven new revenue-generating customers for the 6400 are "a mix of local exchange carriers, multiple systems operators, or the cable companies, as well as competitive local exchange carriers," the company says. This makes the news of RBOC trials all the more interesting.

Having just completed the Osmine certification process, it was expected that Tellabs would pick up its activity around RBOC sales.

Some startups weren't biting on the news, however. Upstart competitor Polaris Networks points out that it has already announced an RBOC trial, so it would almost be embarrassing if Tellabs didn't follow suit (see Polaris Lifts Off).

"By now I would have expected them to have several customers, given how long they've been in the market," says Sab Gosal, director of product marketing at Polaris.

— Phil Harvey, Senior Editor, Light Reading
www.lightreading.com Movers and shakers from more than 100 companies – including Tellabs – will be speaking at Lightspeed Europe. Check it out at Lightspeed Europe 02.

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Elvis Doesn't Live
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Elvis Doesn't Live,
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12/4/2012 | 9:17:03 PM
re: Tellabs Sees Progress With 6400
Hmmm, who would I place my bets on? A supplier with RBOC customers or some start-up who thinks that press releases and analysts quotes are the keys to success. Face it Saab, no RBOC will buy your product. You lack scale, operations experience, financial resources and a track record of working with big companies. Tellabs might not be sexy but they are doing a lot better than most other companies.

You guys are sooooooooo early 2001.
ThouShaltNotJudge
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ThouShaltNotJudge,
User Rank: Light Beer
12/4/2012 | 9:17:00 PM
re: Tellabs Sees Progress With 6400
No doubt. PN's burn rate must skyrocketing from bribe payments to anyone willing to clear a few square feet of unused lab space (and LR for their politically paid innuendo).
gea
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gea,
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12/4/2012 | 9:16:49 PM
re: Tellabs Sees Progress With 6400
Nah...you guys are kinda off base.

First of all, remember that Ocular itself was a startup until last year.

Second, if there's a startup that can actually deliver in this area, its Polaris. Aside from the hardware, they have the protocol knowledge to get up-and-running in Management much faster than any startup (and this is absolutely KEY towards getting into RBOC networks). In addition, that protocol knowledge will be readily leveragable into GMPLS. Of course, Ocular hums the GMPLS tune, but Polaris has been sining it loud and clear since day one.

Nah...WAY too early to write off Polaris.
grapsfan
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grapsfan,
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12/4/2012 | 9:16:48 PM
re: Tellabs Sees Progress With 6400
gea wrote:

> Nah...you guys are kinda off base.

Well, let's see....

> First of all, remember that Ocular itself was a startup until last year.

Very true. But now, they've got the leverage of a big company who has been successfully supporting RBOCs for years. Will any RBOC, or any big carrier, trust a company with 90 employees to provide on-site training, 24x7 support, adequate sparing & manufacturing, etc.? Hard to say. Polaris seem to be making inroads with AT&T, but competition for that customer is tight with Tellabs, and perhaps the former AstralPoint box as well.


> Second, if there's a startup that can actually
> deliver in this area, its Polaris. Aside from
> the hardware, they have the protocol knowledge
> to get up-and-running in Management much faster
> than any startup (and this is absolutely KEY
> towards getting into RBOC networks). In
> addition, that protocol knowledge will be
> readily leveragable into GMPLS. Of course,
> Ocular hums the GMPLS tune, but Polaris has been
> sining it loud and clear since day one.


OK, now you've officially lost me. For the RBOC market, they care about Telcordia for management for cross-connects...and that's it. What "key management" are you talking about, gea? And if you think that the RBOCs are ready for GMPLS, ASTN, or any control-plane stuff, you're off. There may be CLECs, or even an IXC or two, who think they're ready. It'll take the RBOCs years and years to get their operations people the knowledge and procedures to change from the current paradigm. And the whole regulatory environment will have to change before a single device carries TDM & data on the same NE in an RBOC network. That too, could be years away.


> Nah...WAY too early to write off Polaris.

I agree that a company who is still active in spending marketing and R&D $$$ is un-write-off-able (or whatever), but I'm not sure you've got the right reasons behind your statement.
straight shooter
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straight shooter,
User Rank: Light Beer
12/4/2012 | 9:16:47 PM
re: Tellabs Sees Progress With 6400
In the "gea" vs "grapsfan" grudge match, grapsfan wins by a knockout.

gea seems to be comparing Polaris to other start ups. And Polaris is admittedly above average in this area, but gea reveals his lack of carrier background in the protocols statement. Protocols don't equal management in an RBOC book. Can you say TL1?

BTW, I'm not an Ocular fan either. Jury is still out on both these intitiatives. Given Tellabs legacy product, Ciena, Alcatel, Marconi, Siemens, ECI/Lightscape, etc. does the world need really need yet another STS1 crossconnect?
Glass2Glass
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Glass2Glass,
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12/4/2012 | 9:16:45 PM
re: Tellabs Sees Progress With 6400
In message #5, "straight shooter" said:

> Given Tellabs legacy product, Ciena, Alcatel,
> Marconi, Siemens, ECI/Lightscape, etc. does the
> world need really need yet another STS1
> crossconnect?

I doubt that the world needs another STS1 cross-connect, bur the Ocular product (the Tellabs 6400) is a VT1.5 (or DS1, if you prefer) cross-connect.

Glass
b_on_optics
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b_on_optics,
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12/4/2012 | 9:16:44 PM
re: Tellabs Sees Progress With 6400
Gea,

You seem very knowledgeable about the Tellabs product line (no wonder, since you worked there!)

I have a question regarding the Tellabs 7100 Metro DWDM product. It seems to be the red-headed stepchild in Tellabs. All the Tellabs marketing materials talk in great detail about the 6400 and 6500, but the 7100 is given nary a mention.

What is your opinion of the 7100 product? How does it stack up against CIENA ONLINE, Nortel 5200, and other Metro DWDM boxes? What are its key differentiators? Is Tellabs serious about the Metro DWDM space? I heard that the 7100 is actually a repurposed 6100 (project that was canned a couple of years ago). I also heard that Tellabs shut down their upstate NY facility (where all optics development used to take place) and moved this project to Montreal, where the folks are not necessarily optical gurus.

Any comments would be very welcome.

Curious
Bullish_On_Optics


luingolden
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luingolden,
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12/4/2012 | 9:16:44 PM
re: Tellabs Sees Progress With 6400
Given the major hurdles that any new product must clear to enter the market, I think that RIGHT NOW is the right time for new players (like Polaris) to get involved in promoting their capabilities.

The recent serious declines across the sector has eliminated most of the me-too wannabees. There are opportunities for new market players in this environment if they can write, and then deliver, a compelling story.

Polaris must be a serious contender if they have already implemented a SONET-compatible bandwidth transport schema (i.e., VT1.5) and achieved testing at an RBOC.

The "good-old-boys network" within the customer sector isn't as strong as it was a few months ago when many of the "old-boys" lost their jobs... Today we're in more of a perform or die model than in recent history.

SONET-compatible optical switching is the logical next step for carriers. The downside that remains is the continuing incapacity of many carriers to automate their equipment and bandwidth capacity inventories. Without this companion process automation, the carriers will fail to achieve the full promise offered by optical networks.
gea
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gea,
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12/4/2012 | 9:16:44 PM
re: Tellabs Sees Progress With 6400
Grapsfan:
Good, intelligent rebuttal. Let me reply...

>Will any RBOC, or any big carrier, trust a >company with 90 employees to provide on-site >training, 24x7 support, adequate sparing & >manufacturing, etc.? Hard to say. Polaris seem >to be making inroads with AT&T, but competition

Well, I didn't necessarily want to say they'd make it totally alone. If their box ends up being half as good as they were planning back in August of 2000 or so, then there could end up being significant interest, perhaps enough to push foward an Ocular-like arrangement (well, not with Tellabs, of course--a former employer of mine BTW).



>OK, now you've officially lost me. For the RBOC >market, they care about Telcordia for management >for cross-connects...and that's it. What "key >management" are you talking about, gea?

Did 5 years at telcordia, so I can answer this farily well, methinks!

The term "management" is a tricky one to un-entangle. First of all, Telcordia NMS systems such as TIRKS, NMA, TEMS, and so on sit "northbound" as compared to the EMS management systems of big cross connects, SONET NEs and other such gear. If your Gateway NE does not support a ZILLION little protocols, the Telcordia NMSs will do...nada. THIS is one of the major barriers for startups, and its rarely stated outside the deepest/darkest areas of the industry. (Let me give you an example: the Tellabs 7100 Metro-DWDM supports dual stacks..OSI & TCP/IP, and you can boot up IS-IS or OSPF...in an "all-optical" product. Almost no startup can handle something like that.)

All I was trying to say is that Polaris is a very unusual startup in that it has the protocol expertise necessary to get a long way into the big networks.




>And if you think that the RBOCs are ready for >GMPLS, ASTN, or any control-plane stuff, you're >off. ....It'll take the RBOCs years and years to >get their operations people the knowledge and >procedures to change from the current paradigm. >And the whole regulatory environment will have >to change before a single device carries TDM & >data on the same NE in an RBOC network. That >too, could be years away.

Well, I'd normal agree with statements like this in the context of the RBOCs. OPPS really run most of the RBOC networks, and they have to due to sheer size. But in the particular case of GMPLS I disagree. GMPLS does not require any "data" traffic at all to be extremely useful. It will first of all simply be an automated way to provision cross-conections throughout a network. And I don't see that being very different from what is done in a NOC today: with GMPLS, they'll click on the termination nodes, select the bandwidth pipe size, and then boom! All of the intermediary DCSs will auto-configure. Depending on the network and what's done with GMPLS, the change operationally could be very minimal, while HUGELY reducing provisioning costs. (Indeed, rumor has it QOptics is already trialing their GMPLS software in a couple of RBOCs.)


>> Nah...WAY too early to write off Polaris.

>I agree that a company who is still active in >spending marketing and R&D $$$ is un-write-off->able (or whatever), but I'm not sure you've got >the right reasons behind your statement.

Well, I'm not saying its a "slam dunk" by any means. This is a tough environment for ANY vendor. But if you had to place bets on a startup, Polaris is one to watch.

gea
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gea,
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12/4/2012 | 9:16:43 PM
re: Tellabs Sees Progress With 6400
Yikes! You are asking some very sensitive questions!

That which is publically known, first of all, is that the development group in Hawthorne NY (originally part of IBM) was indeed shut down back in April, along with the manufacturing facility in Ronkonkoma NY, as well another related facility in Burlington Mass. That which remains of the 7100 is done in Illinois.

As for the 7100, it had some major strengths that I have not seen in other products. The Hawthorne group, as it turns out, did a really great job in the archuitecture. (I'll give you some examples: 1) Like other DWDM systems, the transponders can handle OC-3/12/48 and GbE. Unlike anything else, however, they can put out AIS at all three SONET rates, and empty GbE framing. 2) The optical layer cn be configured into practically anything, due to the fact that it's got a zillion cards, and some unique optical-layer architectural features. 3) They 7100 platform supports auto-power balancing. A nice little trick.

As for how Tellabs views the 7100, it shouldn't be too big a suprise that they don't see a lot of future in Metro DWDM, for now. So there are lots of design bugs they probably won't bother to iron out unless things improve. Overall, it was a system with some geat and unique design features, but right now I don't think they're taking it too seriously as a money-maker.

And no, it's not a redesign/repackaging of the 6100 or anything else...the 7100 group came from IBM and operated pretty independently of the rest of Tellabs.
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