Optical/IP Networks

Cisco Ships OC192

WASHINGTON, D.C. -- Cisco Systems Inc. (Nasdaq: CSCO) announced a series of new products in its IP+Optical group Wednesday, including a 10-Gbit/s (OC192) interface for its routers and the ONS 15327 Sonet multiplexer (see Cisco Unveils IP+Optical Strategy and Cisco Soups Up Routers).

In addition, Cisco announced that its customers for its new routing products include Sprint Corp. (NYSE: FON) and 360networks Inc. (Nasdaq: TSIX; Toronto: TSX.TO). AT&T (NYSE: T) is a trial customer.

The product announcements come at a crucial time for Cisco. The delivery of the high-speed OC192 cards for Cisco's line of routers has been eagerly anticipated. Juniper Networks Inc. (Nasdaq: JNPR), Cisco's chief competitor in the router market, has been shipping the 10-Gbit/s interfaces for some time. Avici Systems Inc. (Nasdaq: AVCI; Frankfurt: BVC7), a router startup that recently went public, announced support for OC192 several weeks ago (see Avici Intros OC192 Line Card).

As of today, Cisco’s OC192 lineup includes its 12410 router, a 3.5-foot tall systems with a 10-slot chassis and a 200-Gbit/s switch fabric; and its 12416 router, a 7-foot, 16-slot chassis with a 320-Gbit/s switch fabric. Cisco also introduced two new line cards for upgrading existing systems and said that both the 12410 and 12416 can use any existing 12000 series line card ever made, thus protecting its customers’ previous investments.

What hasn’t changed, though, is that the market leader got beaten to market in this product category. “They're a couple quarters late [with OC192] but it's a psychological barrier that they needed to cross," says Seth Spalding, an analyst with Epoch Partners. Spalding says the news may give Cisco a short-term boost in confidence, but it doesn't change the long-term competitive picture with Juniper.

"Not a lot of the market has gone to OC192, so it's not too late to catch up," says Spalding. "But the real reason Cisco is losing market share to Juniper is port density, not the interface speed. It's not going to change the near-term revenue picture."

In a conversation with Light Reading Wednesday afternoon, Cisco executives declined to give details on what impact the new routers will have on its business, either financially or in terms of market share. “I can only tell you that our customers are excited about it, there’s a lot of demand for it, and that we think it’s going to be a very successful product,” says Robert Redford, senior director of marketing for Cisco’s Internet POP Systems Business Unit.

The ONS 15327 launch had been previously reported by Light Reading (see Cisco Hatches Cerent 'Mini Me'). It will ship next week and was announced here exactly one day after Redback Networks Inc. (Nasdaq: RBAK) announced a directly competitive product, the SmartEdge 100 (see Redback's Got a Mini-Me, Too).

Cisco’s officials say the ONS 15327 will help service providers offer high-bandwidth data services, such as virtual private networks and virtual LANs, in “a matter of between 15 and 20 minutes,” according to Sanjay Pol, Cisco’s director of optical transport product marketing.

As Cisco’s ONS 15454 product boasts 22,000 systems to over 500 customers worldwide and a revenue run rate of more than $1 billion, it sees similar results coming for the 15327. “We expect this product to be just as successful as the 15454,” Pol says.

-- R. Scott Raynovich, executive editor, and Phil Harvey, senior editor, Light Reading http://www.lightreading.com
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brichter 12/4/2012 | 10:55:59 PM
re: Cisco Ships OC192
Read the market share analysis. Pretty much tells you what CSCO's strategy is towards JNPR.
Scott Raynovich 12/4/2012 | 8:58:13 PM
re: Cisco Ships OC192 how far will OC192 get Cisco in its battle against Juniper?
pablo 12/4/2012 | 8:58:11 PM
re: Cisco Ships OC192 It will certainly help Cisco continue its dominance in the bacbone market. For all the talk about Cisco's OC-192 problems, it's sometimes forgotten Cisco still gobbles up between 65 to 80% of the backbone market, depending on which study you read. I know many companies who'd love to have problems like that.

It is simply not a sustainable market model to own 100% of any market. Niche competitors will always emerge that do something quite well and nibble away at what you do.

And there's no disputing that having a company with the vision and technological ability of Juniper is the type of stuff that ignites innovation. Competition is always required to being pressure and innovation into any market.

Will Cisco be able to actually start re-claiming market share from Juniper? Personally, I doubt it, because Cisco's market share here remains unsustainably high as it is. In any major telecommunications infrastructure market, in the end you'll have about 3-5 majopr players with about 20-something % market share each. The Internet backbone will be no different in the long term. But those 20% will mean huge numbers, so all is well for all players that succeed in entering that market.
optical 12/4/2012 | 8:58:10 PM
re: Cisco Ships OC192 who's going to buy the 327 when the DS1/DS3 interfaces have no protection?
mu-law 12/4/2012 | 8:58:08 PM
re: Cisco Ships OC192 "who's going to buy the 327 when the DS1/DS3 interfaces have no protection?"

Its pretty uncommon to run / buy electrical ckts with protection these days. This is not widely / consistently supported by terminal equipment as it is in sonet...
Bstingfinger 12/4/2012 | 8:58:08 PM
re: Cisco Ships OC192 is an inservice change...no down time, plug in and go. And the world just keeps on changin' for the better...
SPARKLE 12/4/2012 | 8:58:05 PM
re: Cisco Ships OC192 Pablo,

Very, very well spoken indeed. Cisco is facing a gradual decrease in backbone market share period. Unsustainable is here defined by false dominance due to the previous shortage of competent players.

As the economy slows Cisco will lose additional market share as players merge, aquire etc. and create machines large enough to out-market Cisco in some areas.

Ciscos' OC192 effort is not one to regain marketshare but to stem the bloodflow as quickly as possible.

Having played played a role, albeit a small one, in the design effort for the OC192 interface, I can tell you that absolutely no expense has been spared in designing and building a "competition-crusher". Their new module is smaller, faster, better built, better engineered than any I have assisted on. I would be absolutely stunned if they didn't actively seek to resell it to their competitors.
Cisco Watcher 12/4/2012 | 8:58:04 PM
re: Cisco Ships OC192 optical,

"who's going to buy the 327 when the DS1/DS3 interfaces have no protection?"

Where do you get your (mis)information? The DS1/DS3 electronics reside on each of the two controller cards (Cisco calls them XTCs), these XTC cards are 1 for 1 protected, just like any other electrical card.

Go check out:

twistedcopper 12/4/2012 | 8:58:02 PM
re: Cisco Ships OC192 does anybody know whether this might actually be a byproduct of the pipelinks box rather than the 454? everybody seems so certain that this came out of the cerent side... just another perspective. i'd be interested in any thoughts.
red1969 12/4/2012 | 8:58:02 PM
re: Cisco Ships OC192 http://biz.yahoo.com/bw/010131...

I'd be interested to hear what people think of the new products?
Is this superior to Junipers / Avici's offerings?

(Not a techie, just curious)
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