Tellabs Takes a New Tack

Tellabs is changing its product strategy by reselling a product from White Rock Networks

February 7, 2002

3 Min Read
Tellabs Takes a New Tack

Tellabs Inc. (Nasdaq: TLAB; Frankfurt: BTLA) announced today an original equipment manufacturer (OEM) agreement with startup White Rock Networks, through which the two firms will codevelop an optical transport product to be sold by Tellabs (see Tellabs Integrates With White Rock).

Under the terms of the agreement, Tellabs will combine White Rock Networks' VLX2010 OC48 (2.5 Mbit/s) and VLX2020 OC192 (10 Gbit/s) Sonet add/drop multiplexers (ADMs) into the Tellabs Titan 6100 dense wavelength-division multiplexing (DWDM) system; and Tellabs will manage, market, sell, and support the integrated product, which will be available in June 2002.

The move offers more evidence of a big strategy shift underway at Tellabs. In the past, Tellabs has tried to build its technology in-house. But the company, which dominates the digital crossconnect market with its Titan 5500, has now shifted toward acquisition and outside partnership in the next-generation optical area, after struggles with its own next-generation products (see Tellabs Pulls a Switch). Just last month, for example, it finalized the deal to buy Ocular Networks (see Tellabs Nabs Ocular).

"I think this is an admission on the part of Tellabs that startups can produce next-generation products quicker than they can,” says Michael Howard, principal analyst and cofounder of Infonetics Research Inc..

The Tellabs marketing team agrees that the strategy has changed.

“The key message we want to get out there is that we are doing whatever it takes to enhance our products as quickly as possible," says Brent Schnell, strategic alliance manager for Tellabs. “This is just one way we can do that. You’ve heard of 'build or buy'? Well, we are taking a third approach -- partnering.”

The White Rock technology to be integrated with the Titan 6100 chassis will enable the product to aggregate traffic at OC3 (155 Mbit/s) and OC12 (622 Mbit/s) speeds and add Sonet connectivity. It will also enables the Titan 6100 to offer 10-Gbit/s support. It currently only handles 2.5-Gbit/s speeds and doesn’t aggregate slower traffic types.

The Sonet ADM features give Tellabs more ammunition against its competitors. For example, ONI Systems Inc. (Nasdaq: ONIS) has already announced ADM integration in its metro transport product (see ONI Announces Sonet/SDH ADM and ONI's Got a New Mux). Other competitors also offer separate ADM products. Ciena Corp. (Nasdaq: CIEN) will soon be out with these features from its Cyras acquisition. And Nortel Networks Corp. (NYSE/Toronto: NT) also has a separate Sonet ADM.

"This seems to be the direction a lot of these companies are moving in," says Mark Lutkowitz, vice president of optical networking research at Communications Industry Researchers Inc. (CIR) "ONI is the biggest competitor [with the Tellabs 6100]. Maybe Tellabs feels it has to keep pace with them.”

At first glance, the announcement with White Rock looked as if it might overlap with the product Tellabs acquired from Ocular. But experts say that the two products fulfill different requirements.

“Tellabs bought Ocular for the digital crossconnect functions,” says Infonetics' Howard. “The White Rock product is a real compact ADM. They are completely different.”

Currently, the agreement only allows Tellabs to integrate the White Rock product into the Titan 6100 and does not permit Tellabs to sell the box separately. But both Tellabs and White Rock say the agreement could change in the future.

There is also some speculation that Tellabs may eventually acquire White Rock Networks. Andrew Knott, vice president of marketing for White Rock says he has no knowledge of any acquisition talks so far.

“I can’t speak to any future mergers or acquisitions,” says Tellabs' Schnell. “There is nothing in the agreement we have signed that speaks to that. The future will bear what the future will bear.”

— Marguerite Reardon, Senior Editor, Light Reading

Subscribe and receive the latest news from the industry.
Join 62,000+ members. Yes it's completely free.

You May Also Like