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Optical/IP

Cisco Kills Monterey Router

As it turns out, rumors of the demise of Cisco Systems Inc.'s (Nasdaq: CSCO) optical core router were not greatly exaggerated (see Cisco Preps New Optical Switch ).

Cisco confirmed today that it's discontinuing its ONS 15900 Wavelength Router product, which it acquired when it bought Monterey Networks in a stock deal worth about $500 million in August 1999.

"There's not a replacement for it currently," says Cisco's optical boss, Carl Russo. "We found that the marketplace it was addressing was very slow to take off. So we're going to stand down and watch this market. When we see it start to take off again, we'll make a re-entry decision at that point."

That could be some time. It is currently estimated that there are fewer than 100 service-provider facilities in North America that could take advantage of a product as large as the Monterey device.

While Cisco says it still believes that a mesh architecture in the network's core is the way to go, the capital spending crunch is forcing it to retrench and throw its weight behind the metropolitan market, where it already has a foothold.

"Most [service providers] are coming to the conclusion that they've got core networks. What they don't have is a way to get enough traffic onto them," Russo says.

Just how extensive an effect this product's demise will have on Cisco remains to be seen. Cisco hasn't yet addressed what it will do with the inventory for the wavelength router or whether that glut will result in a charge against earnings.

Also, the effect that the cancelled product will have on the optical components firms that supported it is unknown. “When we made a decision to discontinue the product, we chose not to wait until we had all the answers because we felt it was material enough that it should be out in the public domain,” Russo says.

"We're going to be redeploying and belt tightening, and it's not clear how all this will shake out. But our first concern is to get the talent base reassigned to those projects that make sense."

Russo says that about 200 employees will be reassigned and Cisco will also work to help the customers that have already bought the ONS 15900. “We're going to work with our customers to make them whole and help them along. That work has just started so I don't know how that's going to sort out,” Russo says.

In September 2000, Cisco said that one large carrier, WorldCom Inc. (Nasdaq: WCOM), had completed its initial phase of testing for the ONS 15900 and one startup carrier, Petronet Corp., was testing the product. In November 2000, Cisco announced that the first “paying customer” for the hulking box would be Cambrian Communications LLC, a Fairfax, Virginia-based carrier's carrier whose purchase Cisco helped finance (see Cisco Plods Toward Optical Portfolio).

By sending its optical router to the glue factory, Cisco cedes that part of the optical battle to Tellium Inc., Ciena Corp. (Nasdaq: CIEN), and others. However, Cisco will remain in the core DWDM market with its ONS 15800 products. "We have over 20 customers for the 15800 series, so I'm pretty excited about what I'm seeing there," Russo says.

- Phil Harvey, Senior Editor, Light Reading http://www.lightreading.com
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big_cecil 12/4/2012 | 8:36:45 PM
re: Cisco Kills Monterey Router Any thoughts on whether this is good or bad
news for Tellium ?

Good - one less competitor.

Bad - Cisco states that market isn't worth
pursuing.

Or, is this just their spin because they bought a
$500M pile of sh!t and wanted to save face.
Cisco Watcher 12/4/2012 | 8:36:44 PM
re: Cisco Kills Monterey Router I think it's bad for Tellium/Ciena. I'm not saying that the Cisco product was any good (I have no opinion on it whatsoever), but Mr. Russo does have a point about the core of the network. Carriers have spent a lot of money increasing the capacity of the core without realizing that they also need to increase the capacity in the metro (otherwise, how do you use up all of the bandwidth in the core). That's why companies like Cerent, Siara and Cyras were formed: to benefit from this need to improve the capacity and services within the metro/access network.

Basically, I think this will work in cycles: carriers improve the metro/access, then too much bandwidth is being used and the core is overloaded, so they start building up the core and now the metro/access is starving for more bandwidth so they go back to improving it, ad infintum.

CW
el_loco 12/4/2012 | 8:36:44 PM
re: Cisco Kills Monterey Router

This is not good news for Tellium.

Tellium is the other major
O-E-O STS-48 granular vendor.
My take: Cisco has figured
out the O-E-O 2.5 Gbps granular
market is simply not worth
pursuing. I don't blame them.
O-E-Os are power and space hogs.

Any O-E-O element makes sense
mostly as an STS-1 level
groomer. At STS-48, Monterey
and Tellium have made a big
bet that electronic "emulation"
of a photonic switch is a real
market opportunity. Big mistake.

If there is a market for
wavelength-granular management,
it belongs to photonic
switches (Nortel, Calient, Lucent
and at least a dozen other
start-ups).

popotoafd 12/4/2012 | 8:36:43 PM
re: Cisco Kills Monterey Router "I think it's bad for Tellium/Ciena. I'm not saying that the Cisco product was any good (I have no opinion on it whatsoever), but Mr. Russo does have a point about the core of the network. Carriers have spent a lot of money increasing the capacity of the core without realizing that they also need to increase the capacity in the metro (otherwise, how do you use up all of the bandwidth in the core)."

Maybe. But Ciena's CoreDirector is not only being used in the core but also at the edge. Broadwing is using Corvis' all-optical switch at the core yet also the CoreDirector at the edge. In addition, LayerOne is using it as an edge switching device in its interconnection centers. I wonder if it was actually the lack of versatility (grooming) that really was at fault here for the Monterey product...
switchrus 12/4/2012 | 8:36:41 PM
re: Cisco Kills Monterey Router What switch technolgy was this wonder based on ?
Latitude2 12/4/2012 | 8:36:40 PM
re: Cisco Kills Monterey Router The issue with the Monterey box is that it doesn't work. Russo's comment about the market is pure coverup. Tellium has $900M in contracts and beat Monterey in every account even with Cisco behind them.
flanker 12/4/2012 | 8:36:40 PM
re: Cisco Kills Monterey Router Ciena's mgmt would never approva a Cisco sale. They dont need to, they are not short of cash.

Also, the issue w tellium isnt ooo v oeo, its simply the density of the switch, which is considerably beyond what most carriers need today. The Ciena product, it has been said on these boards, is more of a grooming device.
kbkirchn 12/4/2012 | 8:36:40 PM
re: Cisco Kills Monterey Router This is pure speculation, but...

With the Monterey 15900 dead and Pirelli 15800 looking pale, doesn't it make more & more sense for Cisco to acquire Ciena?

Acquiring Ciena would immediately place Cisco into the #2 spot in LH Switching and DWDM. "Our goal is to be #1 or #2 in every market we enter."

Granted, this wouldn't happen immediately, as Cisco isn't finished with their layoff and Ciena has to drop a few more points to make it more affordable...

Comments?
wdog 12/4/2012 | 8:36:39 PM
re: Cisco Kills Monterey Router "The issue with the Monterey box is that it doesn't work. Russo's comment about the market is pure coverup. Tellium has $900M in contracts and beat Monterey in every account even with Cisco behind them."

I first heard that Tellium had $900M in contracts over 9 months ago. Can anyone please comment on if any of this has actually turned into revenue? Surely some should have turned into real revenue by now? Also, who are the accounts that Tellium has won. And please don't tell me C&W and Qwest. They haven't installed anything in either account other than lab gear from what I hear. I might be wrong, but I think the $900M is smoke.
wdog 12/4/2012 | 8:36:39 PM
re: Cisco Kills Monterey Router Someone asked what is the impact on Tellium. I would say this is the handwriting on the wall. This just proves what Ciena has been saying all along, GROOMING IS IMPORTANT. It is becoming very clear to anyone paying attention that non-grooming switches like this Cisco box, the Tellium switch, and the Sycamore SN16000 are not going to cut in. Carl Russo knows that as well, and if could say what he really thinks instead of the Cisco party line, he would. Remember, Carl came to Cisco with Cerent, he understands why grooming is important. The market belongs to Ciena and maybe BrightLight if they can make it through this market downturn.
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