Optical/IP Networks

Marconi's SDH Blitz Highlights Strategy

Marconi plc (Nasdaq/London: MONI) today indicated it will be introducing a range of new products with a focus on Synchronous Digital Hierarchy (SDH), a key technology for European telecommunications markets (see Marconi Unveils SDH, MLS). The company also confirmed changes to the structure and management of its optical division.

The clear question is: Is this wise?

To answer that, let's start by looking at today's announcements. The first, and possibly the most interesting, is Marconi's statement about the ongoing development of a multi-layer switch (MLS) that Marconi says will be "launched next year."

Marconi says the MLS has both an optical and electrical core, combining transport and switching functions in one box. The unit, Marconi says, can switch wavelengths in the optical domain (saving transponder costs). It can also groom channels a la the CoreDirector switch from Ciena Corp. (Nasdaq: CIEN), except the MLS will work with SDH channels, not Sonet ones. Packing the two cores together also enables Marconi to provide wavelength regeneration, boosting one wavelength without having to boost all the others in the same fiber.

Sounds terrific, but Marconi's not alone in its claims. Corvis Corp. (Nasdaq: CORV) and Sycamore Networks Inc. (Nasdaq: SCMR) made similar dual-core switch announcements earlier this year, and Corvis says it's already got tests or trials in various stages at five carriers, including Broadwing Inc. (NYSE: BRW) and Qwest Communications International Inc. (NYSE: Q).

Granted, Corvis's focus appears to be on North American carriers using Sonet, which could give Marconi an edge in other parts of the world. But Marconi's clearly in a race with competitors and startups for what many seem convinced will be a return to long-haul demand in the not-to-distant future.

Which raises another question, namely: Is Marconi banking too heavily on long haul?

No, some say. "There are a number of proposals out there for long-haul and ultra-long-haul systems that integrate transport and switching," says Robert Rosenberg, president of Insight Research Corp. He says market growth, though, depends on the introduction and acceptance of services in the metro and access portions of the network that will boost the need for more capacity. Video and entertainment services fit that bill.

For its part, Marconi clearly hopes its SDH emphasis might give it a key differentiator when the market picks up. And that brings us to Marconi's second announcement, a slew of SDH gear that includes a bunch of add/drop multiplexers and crossconnects, dubbed the Series 4, that have next-generation support for SDH networks.

Features include support for generic framing procedure, virtual concatenation, and link capacity adjustment (see Next-Gen Sonet , page 3, for explanation of terms). Marconi claims to have all these features in the new gear now, which is a plus, experts say, bringing them into the next-gen Sonet -- er, SDH -- game.

"I think it's about time," says Michael Howard, principal analyst and founder of Infonetics Research Inc. He says the new gear's remote configuration and management capabilities bring Marconi out of the legacy category, where he says the company's gained its market share in Europe. Hopefully, Marconi can use the influence it already has to open doors for its new products, despite increasing competition.

So why is Marconi making so much out of SDH? That's easy, experts say. While Sonet dominates carrier networks in the U.S. and Canada, the rest of the world, including Europe, the Asia-Pacific region, and the Middle East and Africa deploy SDH. And Marconi's already got a foot solidly in the SDH door.

KMI Corp., for instance, forecasts that in 2002, sales of Sonet/SDH transmission equipment, including Sonet add/drop multiplexers and terminal gear, will be $11.25 billion. Of that, SDH gear represents roughly 60 percent, about $6.5 billion. Digital crossconnects with Sonet/SDH interfaces will garner about $3.17 billion in 2002, the firm says, of which about $970 million will be SDH gear.

Sources differ as to Marconi's share of the SDH market. In April 2002, Marconi, citing figures from RHK Inc. in a press release, claimed to be the market leader in Europe, with 25 percent of a $5 billion SDH market there.

According to KMI, however, the company trails Alcatel SA (NYSE: ALA; Paris: CGEP:PA), Lucent Technologies Inc. (NYSE: LU), Siemens AG (NYSE: SI; Frankfurt: SIE), and others in worldwide SDH revenues.

Notably, Marconi's focus on SDH won't eliminate all its Sonet products. The company will still provide Sonet interfaces for the multiservice switches it makes in the U.S., such as the BXR-48000 featured in news earlier this week (see Marconi Gets a Boost). But going forward, its optical gear will be built to SDH network specs.

Marconi's strategic shift is mirrored by some internal changes. The company today confirmed that Dave Lewis, executive VP and general manager of the Optical Networks division, will be leaving at an unspecified future date. Marconi's decided to meld the Optical Networks division with its Broadband division. Another executive VP, Tricia Dooley, will take charge of the new consolidated group.

Will there be layoffs? "It's too soon to tell," says a Marconi spokesman.

— Mary Jander, Senior Editor, and Peter Heywood, Founding Editor, Light Reading
spegru 12/4/2012 | 9:44:19 PM
re: Marconi's SDH Blitz Highlights Strategy The 'new' platform will be PMA32 + MSH64 in the same rack with a door on the front saying 'New Whizzy MLS Box'..... At least that's what I'd do!! ;-)


PS. you'd better hope they've got the optical layer design rules sorted out at last.....
belas_knap 12/4/2012 | 9:44:18 PM
re: Marconi's SDH Blitz Highlights Strategy True to an extent, but Lightscape doesn't have the footprint in the market and the price points that Marconi has. Lightscape, Alcatel, Marconi, Cisco now have similar products for the international markets & I think this is a bold but necessary move for Marconi (Nortel hasn't bothered with an SDH equivalent for some strange reason, Lucent hasn't a next-gen SDH & Ciena's K2 won't make it also....).
The move is definitely a "do or die" for Marconi, and IMHO the success will depend on two things : firstly, if they can start making margins on these products and nor give them away (as they are currently doing with their SDH ADMs) and secondly if they can convert their installed base to the new product line. The latter is a little more difficult, since there is a degree of nervousness in the market about Marconi's future (as there is with Lightscape) and they need to ensure that they don't lose their installed base to competitors as they try to upgrade it. Thought they might have put ATM into the edge switches, though, since there's a lot of it about in the SDH market especially for DSL aggregation. You'd als ohave to look at the GE capability also since this is where the market will turn to longer term, and Cisco has the edge in that area. Sure beat's Alcatel's offer in the market by a mile, though. Should make the European & Asian markets an interesting place to sell in over the next 12-24 months.

Anybody have any more details about the card densities on these products ?

Looking at the Marconi new product data and comparing it with Lightscape's (ex ECI Telecom)XDM. Seems Lightscape introduced a better SDH product 18 months earlier...
xbar 12/4/2012 | 9:44:18 PM
re: Marconi's SDH Blitz Highlights Strategy Looking at the Marconi new product data and comparing it with Lightscape's (ex ECI Telecom)XDM. Seems Lightscape introduced a better SDH product 18 months earlier...

midyatspor1000 12/4/2012 | 9:44:15 PM
re: Marconi's SDH Blitz Highlights Strategy How about Corvis' Optical Convergence Switch(OCS), they have it available for a long time and it's similar to Marconi's, seems to me everyone is following Corvis' Vision, they were the only one who came up with this idea and switch, lets see what happens.
kentishman 12/4/2012 | 9:44:14 PM
re: Marconi's SDH Blitz Highlights Strategy I used to work for Marconi and know the SDH products very well. I would say that the difficulty a company like Lightscape (which has some superb products) has in breaking into Marconi's (or Alcatel's or Nortel's) markets is the Network Management System. Virtually every Telecom organisation in Europe and the Far East has a Marconi SDH Cross-Connect (MSH83 84 86 etc)these have the MV36 and MV38 Element/Network management system. (Alternatively it will have come with an Ericsson badge on it but it's the same product).

This gives Marconi an advantage in selling SDH products to almost anybody since they probably already have a Marconi Management system in the Network Management Centre.

I think this is where the startups such as Corvis are finding it difficult to gain traction in the European Market. Incumbent operators in Europe tend to have one or two suppliers and once they have their NMS boxes everwhere it is almost impossible to sell them something different (unless your name happens to be CISCO).

Of course you can alway's try an alternative Carrier but since they all seem to be on the verge of bankruptcy you will probably have to give them the box to get even a trial system.
NetworkMercenary 12/4/2012 | 9:43:51 PM
re: Marconi's SDH Blitz Highlights Strategy It's clear that Marconi holds a majority of the market share in Europe with SDH. They also will start to excel in North America with the BXR48k and next-gen multi-service ATM devices.

I don't believe that Marconi will loose much traction with SDH. I would agree or even state that operators are much less likely to adopt a new platform, increasing the control plane for managability and retraining, etc. As long as there is critical product development that makes sense, they aren't going anywhere.

Their viability as a company is quite sure I would say. The financing has been completed and they have substantial cash funds. Actually, over the next few years I believe their market share in the SP world will increase dramatically with the BXR48k and next-gen SDH - NM
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