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Cisco Sees Euros in SDH

Light Reading
News Analysis
Light Reading
6/25/2002

By most yardsticks, Cisco Systems Inc.'s (Nasdaq: CSCO) ONS 15454 -- the Sonet add/drop multiplexer that resulted from its purchase of Cerent -- has been one of the few successes to emerge from the realm of optical startups (see Was Cerent Worth It?). Now Cisco is hoping to extend that success to the rest of the world.

Yesterday the company launched the ONS 15454 SDH, an equivalent platform designed specifically for the European market. The news was buried among half a dozen related optical announcements that Cisco made (see Cisco Rolls'em Out).

The burning question is: Why did it take Cisco so long to release this platform? "Basically the development took us that long," says David Smith, head of optical marketing, for Cisco's EMEA.

Sonet, the standard on which networks in the U.S. are built, and SDH, the standard in Europe and the rest of the world, share the same data rates, but otherwise are very different beasts (see Sonet (Synchronous Optical NETwork) and SDH (Synchronous Digital Hierarchy)). "Even though both are TDM, they are completely different," says Smith.

As a result, the operating system software must be built from scratch, and some of the cards in the system, such as the crossconnect card, are different. Even the physical chassis is different because it must comply with the requirements of European Telecommunications Standards Institute (ETSI), which are different from those of the American National Standards Institute (ANSI).

Only the line cards are common, because they are multifunction, being built with chips that can handle either Sonet or SDH. Many chip makers now offer framers and mapper chips that support both standards.

Times have changed since the original Cerent box first made its appearance in late 1999, and that's reflected in the fact that Cisco calls the 15454 SDH a multiservice provisioning platform (MSPP) rather than an add/drop mux. There is more of a requirement to switch IP-based traffic than there was two years ago. Cisco wants to emphasize the box's ability in this regard, which will allow European carriers to deploy Ethernet over their existing SDH-based network infrastructures.

In fact, Cisco originally planned to introduce the 15454 SDH in January this year but delayed the introduction until the Gigabit Ethernet line cards were ready, says Smith, adding that he believes these to be the first full line-rate Gigabit Ethernet interfaces available to the SDH-based markets.

The 15454 SDH offers interfaces from E1 (2 Mbit/s) all the way up to STM64 (10 Gbit/s), according to Cisco, and all are available now. "U.S. CLECs can look at a point product," says Smith. "But European PTTs won't do that. They want an end-to-end solution."

Analysts applaud Cisco's attempt to broaden its product portfolio, and many say it's a no-brainer that it should try to widen the market for its Cerent box, which "defines the success of its optical portfolio," according to CIBC World Markets.

But has the product introduction come too late? When Cisco introduced the original Cerent box in 1999, it was plugging a gap in the market. In the intervening time, SDH vendors have had plenty of opportunity to fill any similar voids in the European market.

"We have had time to react," says Thomas Fuerst, director of Alcatel SA's (NYSE: ALA; Paris: CGEP:PA) terrestrial network division, global solutions. Alcatel introduced a family of MSPPs more than two years ago, he says, and claims to have shipped more than 30,000 units of this family in 2001 (see Alcatel Announces).

"Although we keep an eye on Cisco," Fuerst adds. "We think that in terms of density and features, they are now a generation behind."

Cisco's Smith contends, however, that Alcatel and Nortel Networks Corp. (NYSE/Toronto: NT) can't be direct competitors for the 15454 SDH because they don't offer the same end-to-end functionality. The only vendor that does compete directly is ECI Telecom Ltd. (Nasdaq/NM: ECIL), he says.

Alcatel's OMSN 1660 SM, which, according to Fuerst, is the closest competitor to the 15454 SDH, offers all interfaces from T1 (1.5 Mbit/s) to STM16 (2.5 Gbit/s), but doesn't support STM64. And the OMSN 1670 SM, which does offer STM64, doesn't offer interfaces below STM1 (155 Mbit/s).

The 15454 SDH is in trials with "at least two" major PTTs as well as enterprise companies, utility companies, and cable TV companies, Smith adds. One customer, Swiss utility company Elektrizität Werk Kanton Thurgau, was named in yesterday's announcement. Smith hopes that one of the PTTs, which has been trialing the gear since before Christmas, will also be announced this year.

Cisco also announced the ONS 15530 Metro DWDM system yesterday, which it describes as a baby brother to the ONS 15540 (see Cisco Piles On the DWDM ).

— Pauline Rigby, Senior Editor, Light Reading
http://www.lightreading.com

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DCITDave
DCITDave
12/4/2012 | 10:13:10 PM
re: Cisco Sees Euros in SDH
I've asked CSCO whether Elektrizit+t Werk Kanton Thurgau was a vendor financed buy and haven't heard back from them?

Does anyone else know?
FiberGuy
FiberGuy
12/4/2012 | 10:13:06 PM
re: Cisco Sees Euros in SDH
Why don't they just buy Marconi? It is probably cheaper than putting that much effort into trials.
alcaseltzer
alcaseltzer
12/4/2012 | 10:13:02 PM
re: Cisco Sees Euros in SDH
Why don't they just buy Marconi?

Oh, that sounds like fun - wading into Marconi's ocean of troubles and trying to sort out the mess?!
belas_knap
belas_knap
12/4/2012 | 10:12:52 PM
re: Cisco Sees Euros in SDH
No, it wasn't financed by Cisco.
BobbyMax
BobbyMax
12/4/2012 | 10:12:46 PM
re: Cisco Sees Euros in SDH
The market size for the Cisco 15454 SDH ( acquired from another company by Cisco) is not clear. From what is known, there is not a substantial need for this product in the market place.
FiberGuy
FiberGuy
12/4/2012 | 10:12:43 PM
re: Cisco Sees Euros in SDH
True... but if the product is developed, sell into any market you can. Revenue is revenue...
mesolithic
mesolithic
12/4/2012 | 10:12:30 PM
re: Cisco Sees Euros in SDH
RHK have just released the Q102 report for SDH ADM/OED market that values Europe at $441M/qtr. Given that 31% of this is Marconi (Ericsson is also Marconi), there's a good chance of Cisco picking up a lot of this when Marconi goes out of business sometime in July .....
belas_knap
belas_knap
12/4/2012 | 10:12:30 PM
re: Cisco Sees Euros in SDH
Not sure this is exactly true. YOu can look at the current SDH market sizing for a start. Given a size of, let's say, $3Bn ($5Bn if you believe RHK) and then assume around 60% of this is already tied up in contracts, then this leaves a market of around $1.2 Bn it can address in SDH alone. The SP DWDM market is also worth around $100M in Europe according to IDC, some of which will also be accessible. And then there's the Ethernet portion - probably another $100-200M ? So this leaves an addressable market of maybe $1.5Bn. This sorta ties in with Morgan Stanley projections for MEtro in Europe ($1550M in 2003) & also Ovum. If you believe RHK, around 59% of this STM-n SDH revenue is in the STM-16, another 17% in the STM-64 - the "sweet spot".
Even if the product takes only 5% of that in the first year, that's still $75M. And that's just Europe.
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