What are the big challenges and opportunities for optical transport equipment vendors just now? Growth in long-haul 100G, data center interconnect, transport SDN and 100G metro aggregation are at or near the top of the list. (See Optical Is Hot in 2015 and Top 5 Optical Trends for 2015.)
With a healthy 100G business tucked under its belt from sales of its DTN-X platform, and a product pitched squarely at the data center interconnect market (Cloud Xpress) gaining traction, Infinera Corp. (Nasdaq: INFN) looks like it has the other two opportunities firmly in its grasp. (See Infinera Strategy Pays Off, Stock Soars.)
First, 100G metro aggregation. When Infinera launched Cloud Xpress in September 2014, CEO Tom Fallon said the company had identified data center interconnect as a viable near-term market and that 100G metro aggregation opportunity would follow in late 2015 and 2016. "We'll be taking the full functionality of the [100G] DTN-X and putting it into metro form factor," noted Fallon. (See Infinera Targets Data Center Connectivity Market With Metro Platform.)
MKM Partners analyst Mike Genovese believes the vendor is on course to stick with that timeframe and, in a research note issued earlier today, noted that the launch of a system based on the vendor's photonic integrated circuit (PIC) in the second half of 2015, with revenues in 2016, would position Infinera nicely as demand for 100G metro aggregation products ramps up.
"Once this new product is out, Infinera will be playing in a total addressable market in the low double-digit billions of dollars annually," adds Genovese.
That market is not short of competition, though. The likes of Alcatel-Lucent (NYSE: ALU), Ciena Corp. (NYSE: CIEN), Coriant and Cisco Systems Inc. (Nasdaq: CSCO) will be battling for business across the board. Huawei Technologies Co. Ltd. is a strong rival everywhere outside the US, while a number of other specialist optical vendors, such as BTI Systems Inc. , ADVA Optical Networking , Transmode Systems AB , MRV Communications Inc. (Nasdaq: MRVC), Cyan Inc. , ECI Telecom Ltd. and others are all looking to win business too.
More complex is the issue of programmable transport networking, the ability to use SDN tools to manage and provision capacity. There has been a lot of product development and talk, but Infinera's equipment is being managed using SDN tools by Pacnet , the Asia-Pacific international operator that has been at the vanguard of carrier SDN rollouts.
The operator has added SDN controller capabilities to its Pacnet Enabled network (PEN) and is offering customers the ability to use a portal through which they can add and/or remove network capacity as they need. (See Pacnet Offers Transport SDN Services.)
To manage capacity requirements in this way on Pacnet's long-haul transport network, which has been built using Infinera gear, the PEN system connects with the Infinera boxes via the Open Transport Switch (OTS), a software abstraction layer (a form of middleware) that sits between the controller and the Infinera boxes, exposing the topology of the network, explains the vendor's director of solutions and technology, Geoff Bennett.
The OTS software can be installed on any Linux-based network appliance, acting as an up-to-date mediation layer that can be constantly updated to support the various protocols and interfaces required to communicate with the various controllers and SDN systems that might be used or which are still being developed.
For the PEN deployment, for example, OTS links with the PEN using RESTful APIs, the interface of choice for PEN. In another deployment the communications between OTS and the service provider's SDN controller/tools could be OpenFlow or Netconf, notes Bennett. "We don't really care -- we're agnostic. We'll likely end up supporting a handful" of protocols on OTS, he adds.
The key point for Infinera is that its products are ready for SDN deployments, it has a flexible software layer that can be updated to support customer needs and changes in standards/specifications and now it has a live customer that is on the verge of becoming part of an ambitious Tier 1 operator, as Pacnet is in the process of being acquired by Australia's Telstra Corp. Ltd. (ASX: TLS; NZK: TLS). (See Telstra Snaps Up Pacnet for $697M.)
With multiple bases covered, Infinera looks well placed to meet the key demands of carrier transport network teams in the near and medium term. Small wonder the vendor's stock, at $17.94, is trading at a near 12-month high.
— Ray Le Maistre, , Editor-in-Chief, Light Reading