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Cisco's Ullal Talks Optical Future

Light Reading
OFC/NFOEC News Analysis
Light Reading
3/21/2002

ANAHEIM, Calif. -- OFC 2002 -- It's a tough job and she's going to do it.

That's the impression one gets from speaking to Jayshree Ullal, Cisco Systems Inc.'s (Nasdaq: CSCO) group VP of optical networking. Ullal took the post in August 2001 after Cisco restructured its management team and when her predecessor, Carl Russo, took on a more strategic role (see Reorg Rips Through Cisco's Ranks).

Ullal came to Cisco after it acquired Crescendo Communications in 1993. She eventually took on the role of VP and general manager of Cisco's enterprise business, where the LAN switching business grew from $0 in 1993 to a $7 billion annual run rate in 2000.

In 2000, Ullal went on a nine-month sabbatical. She returned to Cisco in 2001 to work on a stealth project until the company restructured. Since she's taken on her new role, Ullal says she's resigned from the several startup company board positions that she had held.

So why did Cisco give the job of getting its optical products to carriers to someone who used to sell LAN gear to enterprises? Ullal says she sees optical networking as a new market and her forte is taking advantage of new markets. "In 1993, it wasn't obvious that Cisco would be the enterprise [switching] leader. It took about four years of heavy lifting for that to happen. It's the same situation here.

"I've gained a reputation within Cisco as someone who can't hit her forecasts. Whenever I'd put out a forecast [in LAN switching business], we always exceeded it. I'd like to have that problem here."

Ullal also came to Cisco with an acquisition and has helped it acquire other companies. Hmmm, let's see... What might that mean?

On the subject of expansion, Ullal says Cisco is committed to the metro core space, though it doesn't currently have a product offering there to compete with Ciena Corp.'s (Nasdaq: CIEN) CoreDirector. "There's a whole evolution going on in that space to multiservice switching and grooming capabilities. We look forward to participating in that evolution either through internal development, externally [via acquisitions], or through a combination of both." (See Cisco's Appetite for Startups Shifts.)

Of course, the subject of carrier spending came up. Ullal's take is in line with the rest of the industry's constant temperature taking. "I can't define for you how short term [the carrier spending drought] is. For optical networking and for Cisco, 2002 is a rebuilding year."

Ullal says Ciena's pending merger with ONI Systems Inc. (Nasdaq: ONIS) makes "textbook sense... Ciena has a great presence in the core and ONI has a good presence in metro DWDM. But time will tell whether the textbook sense translates into textbook execution... Ciena's and ONI's emphasis is on transport. But the carriers are emphasizing delivery of multiple services."

Cisco CEO John Chambers has said Cisco aspires to be number one or number two in all the markets in which it competes. Ullal draws a distinction between those areas where Cisco aims to be number one and those where it still needs to complete its portfolio. "Do we want to be number one or number two in the metro, next-generation Sonet space? Absolutely. We think we're already there. Do we want to be number one or two in the metro DWDM space? Absolutely. There the definition is changing from pure point products to multiservice DWDM products.

"Do I think we can be number one in the long-haul anytime soon? No. Given the condition of the market right now, we'd rather be number one or two in the hot new markets, such as the metro product areas. In the long haul, it is less about being number one or two and more about completing our portfolio. Our product may be number one or two, but we're pragmatic about being the top one in market share, unless we start building line cards for Lucent and Ciena."

Ullal took on a couple of rumors that had been circulating about Cisco. She says the company has no investment in Calix Networks, an optical access company where Cisco's Russo is chairman of the board.

She also confirmed that many of Cisco's metro products are indeed named after car engines. (The ONS 15454, for instance, was named for Chevy's 454 motor.) "I love it. It shows that [the developers] have a passion that goes beyond technology."

Even many of the product code names have links to the automotive world, Ullal says. The recent four-port Gigabit Ethernet line card for the ONS 15454, for instance, was code-named "Carrera."

"Would I have done that? No. But I'll go with the flow."

— Phil Harvey, Senior Editor, Light Reading
http://www.lightreading.com For more information on OFC 2002, please visit: www.nottheofc.com

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rjmcmahon
rjmcmahon
12/4/2012 | 10:25:02 PM
re: Cisco's Ullal Talks Optical Future
It appears that John Chambers is very short sighted and promotes individuals within the company regardless of their expertise.
_____________

From an outside perspective, his moves may reveal a better long term vision than his peers. The 11 person management reorg preceeded the announcements of telco cutting capex budgets by at least 18 months.

India is building and deploying their utility infrastructure *today*. This management change may be an indication that India will deploy a modern optical fiber network before the US.

http://www.powergridindia.com/

It's worth noting that these plans include deploying fiber at the same time.

"The project will support POWERGRID's plans to diversify services through utilizing it's national network of power infrastructure to include telecommunications facilities. Optical fiber ground wire will be installed on the transmission lines as a dual purpose earth wireGÇôan integral part of the power transmission systemGÇôand optical fiber for telecommunication purposes. This design is in line with global trends as a number of power utilities around the world diversify their operations into telecommunications. POWERGRID has recently announced its plan to establish a joint venture with a qualified telecom operator. "
BobbyMax
BobbyMax
12/4/2012 | 10:25:05 PM
re: Cisco's Ullal Talks Optical Future
Ullal is not familiar with the field of opotical networking. How can she talk about optical future, It appears that the propaganda is well and alive at Cisco.

It appears that John Chambers is very short sighted and promotes individuals within the company regardless of their expertise.
opticaldude
opticaldude
12/4/2012 | 10:43:07 PM
re: Cisco's Ullal Talks Optical Future
I agree with you Deep. If the 454 is the savior of the Metro space, look out, because the product is very weak against most of the next gen product coming out now. The 454 is a very combersome product to prevision for ethernet services and the TDM is not Standards based Sonet. Good luck Cisco in being Number 1 in this market. The 454 has had its day and is on the way out of most SP that I know.
deepciscothroat
deepciscothroat
12/4/2012 | 10:44:39 PM
re: Cisco's Ullal Talks Optical Future
Ullal is a fast talker and a smart lady. She is also half retired (as is half the other folks cisco has working now). What Light Reading should have asked her is how many layer 1 and layer 2 transport people at a real carrier she has met and is working with
LRfan
LRfan
12/4/2012 | 10:44:44 PM
re: Cisco's Ullal Talks Optical Future
tsunami said:
Cerent - Good OC-48 success but where's their 10G upgrade?
Qeyton - No market share
Monterrey - Cancelled project
Pipelinks - Little success
Pirelli - No LH market share
So one out of 5 doesn't seem a deep understanding of transport.
---
Good explanation. Thanks
I think Chambers agrees with you that they have
made missteps getting started.
Regular Joe
Regular Joe
12/4/2012 | 10:44:54 PM
re: Cisco's Ullal Talks Optical Future
Dear Cable Guy,

Anyone can buy a report, only the very gullable believe them.

Even if your mis-information were true and Cisco had sold 35K OC-48 network elements (which they have not) you would still have to add a zero to that and raise the number to 300-350K to match the market share of established metro and long-haul SONET vendors.

So how does having 10% of the market make Cisco a market leader.

How does selling somewhere between 10-20K network elements (my very generous estimate) AT A LOSS demonstrate success in a market?

How long will a company used to seeing 40-60% profit margin on their routers continue to lose money on every sale to justify a bad acquisition?

What do your reports say about that?
cable_guy
cable_guy
12/4/2012 | 10:44:57 PM
re: Cisco's Ullal Talks Optical Future
Its more like 35,000 network elements. And read your reports, a few quarters ago, Cisco was #1 in OC-48 market share ahead of Nortel and everyone else. OC-192 is only a metter of time...
dodo
dodo
12/4/2012 | 10:45:00 PM
re: Cisco's Ullal Talks Optical Future
Right on Tsunami

Remember Kevin Kennedy , the Telco veteran who was in charge of the carrier Business Unit. He couldn't make inroads and they dismantled the whole group last year to structure a new one again this year.

Enterprise is only a fragment/segment of the Telecomm industry.
tsunami
tsunami
12/4/2012 | 10:45:01 PM
re: Cisco's Ullal Talks Optical Future
My comments regarding Cisco not knowing much about their transport purchases apply to Cisco as an entity not to individuals. Cisco is no doubt the top vendor for enterprise networking. However, the company has understood little of telecom. They purchased the following;
Cerent - Good OC-48 success but where's their 10G upgrade?
Qeyton - No market share
Monterrey - Cancelled project
Pipelinks - Little success
Pirelli - No LH market share

So one out of 5 doesn't seem a deep understanding of transport. Their culture of selling to enterprise has not helped them with selling into RBOC telecom and has probably hindered them since you need infinite patience and a willingness to suffer margin problems in the beginning to reap benefits later. Neither of these seems to be Cisco strengths. I'm not bashing them as they've done better at expanding into transport compared to say Lucent or Nortel expanding into enterprise networking. But a deep understanding of telecom - I don't think so.
eyesright
eyesright
12/4/2012 | 10:45:02 PM
re: Cisco's Ullal Talks Optical Future
Most of Cisco's optical products are more like the Corvair. Or as Ralph Nader put it, "Unsafe at Any Speed".

See Pirelli, Monterey, et al....
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