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Optical/IP

Report Disses Metro Core Marketing

It’s not the market, stupid -- it’s your marketing strategy! This is the main message of this week's Communications Industry Researchers Inc. report on what determines which vendors will survive and which will perish in the metro core market (see CIR Studies US Core Market).

Despite the sluggish economy, the report asserts, the metro core market is still growing, and there are still plenty of opportunities out there for vendors that know how to position themselves.

The report forecasts that the metro core market -- which it defines as embracing Sonet, WDM, Ethernet, and routing gear -- will reach $5.7 billion worldwide by 2006. That's up from the $5 billion vendors are expected to cash in on sales in the space this year. The U.S. will account for 40 percent of the market in 2006, the report states, with about $2.3 billion in revenues.

But while there are still plenty of lucrative deals to be had in the metro core, the CIR report insists that many vendors just don’t seem to understand how to land them. “There is insufficient introspection at vendors about the long-term impact of disingenuously hyping gear functionality or promoting purely theoretical advantages of their solutions,” the report mellifluously states.

Many vendors do themselves a great disservice when they tote futuristic capabilities that the market is not looking for, or when they boast of unrealistic cost savings and benefits from using their product, according to the authors of the report, who include: Mark Lutkowitz, CIR's vice president of optical networking research; and Sam Greenholtz and David Gross, senior analysts.

“It’s long past time for more of a shift to honesty,” Lutkowitz says. “It’s long past time that we get rid of meaningless rhetoric… A lot of startups especially are still sounding like it's 2001.”

Lutkowitz says that many companies are still hyping technology that no one wants or needs -- and the service providers just aren’t buying into the hype. “Companies shouldn’t use the market conditions as a total scapegoat,” he says. “In fact, even during the optical euphoria days those solutions weren’t selling.”

DWDM rings, for instance, may never take off, according to the CIR report. “There’s been six years of hype,” Lutkowitz says. “Certainly, in the U.S., it’s not around the corner.”

Even less compelling for service providers are vendors’ constant references to huge savings on operational expenses. Carriers, according to Gross, know that no box out there is going to dramatically change what they have to pay to keep their operations running. “No vendor is going to come in and have a significant impact on opex as a percentage,” Gross says. “It may be easy to do on a spreadsheet, but in reality, it’s just not going to happen… You simply have to have a compelling capex case.”

So which companies are likely to survive in the metro core market? After considering more than 40 different vendors, the CIR analysts are most upbeat about established players like Cisco Systems Inc. (Nasdaq: CSCO), Fujitsu Ltd. (KLS: FUJI.KL), Lucent Technologies Inc. (NYSE: LU), Nortel Networks Corp. (NYSE/Toronto: NT), and Tellabs Inc. (Nasdaq: TLAB; Frankfurt: BTLA). “They didn’t try to go with the products that were being hyped too much,” Greenholtz says. “They let the market direct their energies.”

— Eugénie Larson, Reporter, Light Reading
ThouShaltNotJudge 12/5/2012 | 12:41:19 AM
re: Report Disses Metro Core Marketing I'd like some compensation from CIR and LR for what might be considered plagiarism of a message post from a couple months back:

http://www.lightreading.com/bo...

... although Eug+¨nie Larson is a much better writer.
zettabit 12/5/2012 | 12:41:13 AM
re: Report Disses Metro Core Marketing Maybe Mark or Sam can post their thoughts on this board, but I was very surprised not to see ONI and ADVA in the list of the top vendors.

ONI (now Ciena) has a technically good box and was essentially tied for #2 position after Nortel for metro WDM solutions.

ADVA was their sort of #2 peer, and has been extremely successful at growing revenues (the surest sign of having a good value proposition) over the past 2 years, and this should even increase due to their re-seller agreements with Fujitsu and Siemens.

Maybe I am being too optically-anal about this report. If the authors mean everything deployed in the metro core, then I could understand their vendor selection. But in that case, they are mixing a lot of different product categories into some arbitrary market "segment".
BobbyMax 12/5/2012 | 12:40:59 AM
re: Report Disses Metro Core Marketing I am really very proud of CIR for pointing out false product hypes. The US equipment vendors have hyped their products and cost savings knowinf full well that what they are presenting is patently false. I must again point out there were over 850 optical networking established in the US. These companies were funded by incompetent VCs and in many cases with no technical education. It is because of this behavior that the stock market has lost over 80% of their value.

The most recent propoganda hype and false claims is currently going full speed in the area of IP VPN. The false product claims and propoganda that has gone into the following areas: Softswitches, Next Generation Class 5 Switches, VoIP, Multiservice switches, Edge switches, MPLS. The fact is that any claim can be made by anyone regardless of technical background and education. The same kind of behavior has led to the appointment of CEOs regardless of education, qualification, background and experience.

calpole 12/5/2012 | 12:40:56 AM
re: Report Disses Metro Core Marketing Bobby,
I don't know who you are, but I am sure
you will do good if you study 'middle path'
suggested by Buddhism.

VOIP, VPN, MPLS..SOFTSWITCHES might not generate
revenue, but it will be an extreme comment to
say it didn't make any change to our life.
Because of VOIP, I can call to India
@10 cent a minute instead of AT&T
circuit switched line @42 cent a minute..
Quality difference is there, but still
I must say it works.

So, please do not follow any extreme. Follow
middle path.
yomamma 12/5/2012 | 12:40:50 AM
re: Report Disses Metro Core Marketing >Author: calpole Number: 4
>Subject: To BobbyMax Date: 2/8/2003 11:19:21 PM

>Because of VOIP, I can call to India
>@10 cent a minute instead of AT&T
>circuit switched line @42 cent a minute..

This is good to know - Lucent will save a bundle on the CBX 800 support number!
Elvis Doesn't Live 12/5/2012 | 12:40:39 AM
re: Report Disses Metro Core Marketing ADVA sells it's equipment for enterprise types of applications and not the metro core. They are certainly a major force in the market but different segment. Why have they pursued partnerships for their equipment?

ONI used to be something when there was a CLEC, Metro Carriers market. When that went away what were they left with? Look at Ciena's sales of equipment and you will find that most of their revenues within the US is for CD and oddly enough, Service Contracts, whatever that means. Internationally they are finding a better market for their metro/access equipment but I will be very curious to know if they are making a profit of just using these deals to "fluff" the numbers.
puddnhead_wilson 12/5/2012 | 12:40:39 AM
re: Report Disses Metro Core Marketing agreed. I also found these ommissions curious.

Perhaps this is the reason: "... the metro core market -- which it defines as embracing Sonet, WDM, Ethernet, and routing gear ..."
constantine 12/5/2012 | 12:40:32 AM
re: Report Disses Metro Core Marketing I strongly doubt that survival in the metro space will be determined solely by G«£marketing strategy.G«• Perhaps CIR really means that G«£business strategyG«• will dictate success?

Simply put, marketing problems are rooted in business strategy. Business strategy problems are rooted in lack of differentiation.

Perhaps what Mark and Co. means is that most of the remaining crop of companies attempt to differentiate by using G«£posturingG«• language and making misleading claims. If so, then I would agree. But such type posturing should not be confused with sound marketing.

However, what does it really matter if a companyG«÷s business strategy is to develop a technology that today offers only theoretical promises?
I helped introduce the first G«£metroG«• DWDM system G«Ű perhaps just a little theoretical at the time. Most every expert analyst response back then was G«£why would anybody want it?G«•, or G«£there will never be demand for such a high capacity systemG«•, etcG«™ If we only focus on what the market wants today, weG«÷ll never get to tomorrow.
Litewave 12/5/2012 | 12:40:19 AM
re: Report Disses Metro Core Marketing DWDM rings, for instance, may never take off, according to the CIR report. G«£ThereG«÷s been six years of hype,G«• Lutkowitz says.

Just this one statement alone tells me that CIR knows frigg'n close to nothing about the Metro core.

Yet another CIR BS report.
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