Ciena Shrinks Its Hot CN 4200
The CN 4200, now a year old, is drawing rave reviews from analysts while racking up design wins, mostly in Europe. The box is finding a comfortable niche that overlaps the DWDM and multiservice provisioning platform (MSPP) markets. And Ciena is convinced enough of the platform's success to roll out a smaller version, the CN 4200 MC, earlier this week. (See Ciena Launches Mini CN 4200.)
The new box, unveiled May 15, sports a 32-Gbit/s switching capacity and two 10-Gbit/s ports for uplink. It uses the same linecards and software as the 4200, as well as some new cards tailored for the MC's lower-speed markets.
The numbers on the 4200 are small -- $2 million in revenues last quarter, estimates analyst Tim Daubenspeck of Pacific Crest Equity Partners Inc. But it's the kind of start Ciena hasn't seen from a product in years, although it might be premature to declare Ciena has found its next franchise system.
"I hear whispers that it could do $150 million in fiscal 2007, which seems aggressive compared with our expectations," Daubenspeck says. "But there's no question this is their most successful acquisition."
Ciena hasn't spelled out revenues for the 4200, but the box is the company's "fastest growing product," says Vinay Rathore, Ciena's director of segment marketing. Keep in mind, though that it started from a base of zero a year ago.
Still, analysts say the 4200 is the thing Ciena most wants to talk about these days -- and why not? Among six acquisitions between 2000 and 2004, Ciena's successes are scarce. The $2 billion pickup of Cyras Systems and $900 million purchase of ONI Systems were scrapped in a 2004 restructuring. And Catena -- Ciena's $480 million foray into the access network -- has been a disappointment. (See Ciena Buying Binge Alarms Analysts, Ciena Cuts 1/4 of Staff, and Ciena Backs Off BLCs.)
Amid all those big deals, Ciena snuck in the $150 million all-stock purchase of Internet Photonics. Overshadowed by the Catena deal announced on the same day, the purchase netted Ciena the CN 4200 and its most promising new platform. (See Ciena Buys More Than Catena and Ciena Claims DWDM Coup.)
The 4200 has racked up more than 40 customers, 54 percent of which are service providers, Ciena says. Those ranks include BT Group plc (NYSE: BT; London: BTA), which included the 4200 and other Ciena products in its 21 CN project, and a bevy of smaller European carriers. And while the 4200 recently found a fit with cable provider Cox Communications Inc. , it has yet to score in U.S. RBOCs' networks. (See Ciena Finalizes BT Agreement and Cable Tuning In Ciena DWDM.)
Ciena claims that's a byproduct of the 4200's obsession with the Optical Transport Network (OTN), specified by the International Telecommunication Union (ITU) G.709 standard. Known as the "digital wrapper," G.709 -- a relic of the bubble days -- is catching on, but mostly in Europe rather than in North America.
"The RBOCs have only recently gotten on the OTN bandwagon," Rathore says -- although he notes that requests for proposals (RFPs) requiring OTN are becoming more common. "We're engaged with all the RBOCs."
Part of the CN 4200's early success is based on timing, with the CN 4200 arriving during a growth spurt for many metro networks. But Ciena also scored a hit with the system's key feature, the ability to push any service -- Ethernet, Sonet, whatever -- to any port arbitrarily.
"That is pretty impressive," says Sam Greenholtz, an analyst with Telecom Pragmatics Inc. "You might have to change a couple of cards around, but nothing major. It sort of eliminates the engineering snafus."
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