Sonet: Who's Ahead in Long Haul?

Cisco Systems Inc. (Nasdaq: CSCO) announced yesterday that it's leading the North American market for long-haul Sonet OC48 products, based on figures from RHK Inc. The figures were published in the market research firm's January 2001 report, "SONET Transport and DCS Long-Haul SONET Market Forecast." OC48 links support 2.5-Gbit/s in carrier networks.

North American Long Haul Sonet OC48 Market Cisco's announcement is interesting for several reasons. First, it demonstrates the priority Cisco's assigned to gaining a significant toehold in the market for mainstream carrier equipment, a market the company entered seriously less than two years ago with its acquisiton of Cerent Corp.

But Cisco also has raised a bit of confusion. That's because the success of Cisco's Cerent box, now dubbed the ONS 15454, has been chiefly in network edge applications, not in the long-haul part of the net. The ONS 15454 was among the first products to aggregate OC48 links and feed them from carrier points of presence (POPs) to the network core.

It's also notable that Cisco's announcement this week didn't mention a number of other interesting points from RHK's report. For instance, RHK's figures show Nortel Networks Corp., the overall Sonet market leader, breathing down Cisco's neck in long-haul OC48. Just three points separate the two companies' slices of the OC48 pie.

What's more, RHK's report indicates that Cisco's not leading the most lucrative segment of the North American long-haul Sonet market. Sales of Sonet OC192 (10 Gbit/s) gear were $2.763 billion of an overall market of $5.03 billion in 2000 -- more than the $1.944 billion for OC48 (although more OC48 ports actually shipped). And RHK says that OC192 is the fastest-growing segment of the long-haul market.

What's more, Cisco's not on the map at all when it comes to sales of Sonet OC192 links, according to RHK. Instead, Nortel sales account for 95.1 percent of that market, with the rest of the pie divvied up among other players in tiny slivers.

North American Long Haul Sonet OC192 Market Neither Cisco nor Nortel seems eager to emphasize these points -- for different reasons. For its part, Cisco doesn't yet support OC192, and understandably eschews discussing the potential of that market. "We don't talk about unannounced products," a spokesperson says. And although Cisco's talked for months about adding OC192 to the ONS 15454, nothing has materialized so far.

Some analysts other than RHK say Cisco needn't worry too much about OC192 in the metro space -- where its OC48 presence is strongest. "OC192 isn't big in the access space," asserts Seth Spalding, director at Epoch Partners. He says some vendors, such as ONI Systems Inc. (Nasdaq: ONIS), offer OC192 as an access option, but he doesn't foresee it taking off there for at least a couple of years.

For its part, Nortel seems to view its leadership in long-haul Sonet OC192 links as a mixed blessing. That's because Nortel would rather publicize figures that show its role in next-generation products via sales of DWDM (dense wavelength-division multiplexing) gear. Ironically, Nortel gave a mixed message last week in announcing its market share in DWDM (see Nortel: Top Dog, but for How Long?) -- just as Cisco did with RHK's figures this week.

In both cases, attempts to pin down one aspect of the market served to emphasize a larger, more complex picture that wasn't initially discussed.

-- Mary Jander, senior editor, Light Reading http://www.lightreading.com

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loosemoose 12/4/2012 | 8:48:58 PM
re: Sonet: Who's Ahead in Long Haul? Mary,

You're making the same mistake the Cisco press release makes - you are leaving out the Metro SONET market.

RHK released the SONET Metro Market Forecast & Analysis yesterday, and the information was not included in the Cisco press release. If you read the press release closely, RHK analysts are quoted about the Long-haul SONET market. Cisco (and you) are extrapolating this over the entire market.

Could you PLEASE read RHK's Metro report, calculate the REAL OC-48 market and then write the article?

Otherwise, you're doing a real dis-service to other OC-48 vendors (especially Fujitsu which has 43.9% share of the OC-48 metro SONET market).
Dr. Freud 12/4/2012 | 8:48:55 PM
re: Sonet: Who's Ahead in Long Haul? I have to agree. Plus Ciena's absence looks a little weird.
lightsource 12/4/2012 | 8:48:55 PM
re: Sonet: Who's Ahead in Long Haul? it's coming...cisco with OC192..very very soon..
optical 12/4/2012 | 8:48:54 PM
re: Sonet: Who's Ahead in Long Haul? Cisco 15454 with OC-192 ? Just got delayed until 9/01 for GA. This is the 3rd or 4th slip? Besides the 15454, what other products is the Cisco Optical Networking Group selling? The answer is nothing. Their cutting deals left and right to move the 15454; profits have got to be an issue with these guys. I've seen their prices and I know their costs. They've got a big problem on their hands! Just wait and see.
yomama 12/4/2012 | 8:48:52 PM
re: Sonet: Who's Ahead in Long Haul? No doubt, If I was Fujitsu, I would have to raise a red flag, with over 175,000 NE's deployed it's hard (real hard) to believe they have only 2% share!!!!!!!
Dr. Freud 12/4/2012 | 8:48:51 PM
re: Sonet: Who's Ahead in Long Haul? That's what you get when Wharton and Stanford MBAs with an eye on working in the valley do "research". Only Wall Street equity analysts and management consultants are less accurate.

Plus they need to cover non-US markets. A european carrier just announced a major Siemens longhaul deployment; this news hasnt registered anywhere in the US press. Siemens claims to be pretty far along towards OC 768 deployment.
optera 12/4/2012 | 8:48:45 PM
re: Sonet: Who's Ahead in Long Haul? Nortel OC-192 has been in the market and dominated the 10Gb/s platform since 1995. Five years later and more, others are following the leader. You either lead, follow or step out of the way. Nortel is the SONET leader. 80 % of internet traffic rides on Nortel gear. And this is only the beginning. Live long and find out.
bibiyahoo 12/4/2012 | 8:48:44 PM
re: Sonet: Who's Ahead in Long Haul? Dont buy from nortel. their product sucks !
I bought from them some OC's for my house and the quality was really bad.

they also dont deliver on time.

I sent a packet and it took almost 10 ms to arrive only to realize if was damaged in the way.

I reccomend everyone to buy from babylon instead.
their product is very cute.
LocalYokel 12/4/2012 | 8:48:43 PM
re: Sonet: Who's Ahead in Long Haul? Obvious flame bait
marcy281 12/4/2012 | 8:48:39 PM
re: Sonet: Who's Ahead in Long Haul? Idiot. Don't waste our time.
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