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DWDM

How Ciena Won TyCom

Yesterday's announcement by Ciena Corp. (Nasdaq: CIEN) of a two-year, $150 million DWDM contract with TyCom Ltd. (NYSE: TCM; BSX: TCM) illustrates the growing need for integrated functions in long-haul dense wavelength-division multiplexing (DWDM) optical gear.

Specifically, analysts say Ciena won this contract because its products combine long-haul and ultra-long-haul transport features with the ability to groom small units of bandwidth. This allows Ciena to complete several pieces of an optical networking link by rolling up smaller pieces of bandwidth into a large pipe and transporting that bandwidth over long distances.

"It keeps happening time and again that Ciena wins against its competitors because of its integrated approach," says Raj Srikanth, analyst at Deutsche Banc Alex Brown LLC.

TyCom, which declines to name the other vendors it considered, will be using Ciena's CoreDirector switch and CoreStream transport platform in transatlantic and northern European buildouts of its TGN (TyCom Global Network). TyCom says the links will be terrestrial, leading industry sources to think Ciena's gear will probably aggregate and assign optical bandwidth before it arrives on TyCom's submarine network.

Ciena says CoreDirector can groom STS1 (51.84 Mbit/s) links in Sonet configurations over both long-haul and ultra-long-haul networks -- without an upgrade. It also grooms channels in SDH networks. The CoreStream transport platform requires an upgrade of amplifiers and forward error correction software in order to support ultra-long-haul networking (defined by Ciena as distances greater than 2,000 kilometers). Still, one box fits both long-haul and ultra-long-haul apps.

Analysts see this as a key advantage. "Ciena's CoreStream is capable of supporting both applications on a link-by-link basis, simplifying network design and management," write analysts Alkesh Shah, David A. Jackson, and Arif Mawji of Morgan Stanley Dean Witter & Co. in a research note today.

The note continues: "We believe the move towards integrated ultra long-haul solutions could be bad news for Corvis and Nortel (Qtera) which offer standalone ultra long-haul products. At the same time, we recognize that deployments to-date of integrated ultra long-haul solutions remain limited."

Limited or not, Morgan Stanley sees the TyCom win as contributing substantially -- up to an estimated 17 percent -- to Ciena's projected switching revenues this year.

Although analysts agree this contract will help Ciena meet its numbers, they are clear that it's no cause for unconditional faith in the vendor. For one thing, this contract is no guarantee of future success with TyCom. "Ciena's announcement covers a general agreement for purchase orders to be written in the future," says TyCom spokesman Peter Ferris. To qualify as a supplier for other portions of TyCom's network, including the coveted transpacific portion, TyCom says Ciena will have to compete again.

And Ciena's competitors aren't sitting idly on the sidelines. Some of them, such as Corvis Corp. (Nasdaq: CORV), already exceed the capacity offered by Ciena's products, even though they lack the integration just now. It is certainly conceivable that as features are added, Ciena's claim could be diluted at TyCom and wherever it's relied on an integration sell.

Corvis, for instance, is working on its grooming switch (see Corvis Offers Grooming Tips). So is Sycamore Networks Inc. (Nasdaq: SCMR). And Nortel Networks Corp. (NYSE/Toronto: NT), says the integration of its OPTera LH 1600 switch with its OPTera Connect HDX optical grooming switch will be in trials this summer. Further, Nortel says the HDX will offer 10- and 40-Gbit/s interfaces, making it a compelling deal for carriers in months to come.

- Mary Jander, Senior Editor, Light Reading
http://www.lightreading.com
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optinuts 12/4/2012 | 8:27:32 PM
re: How Ciena Won TyCom i know ciena's good, but is this a new protocol?
manoflalambda 12/4/2012 | 8:27:31 PM
re: How Ciena Won TyCom yeah, its the new SDH+STS acronym feature... or perhaps just a typo... :)

Wonder if BWM + 400G bid for this contract?

Salute,
Manoflalambda
optinuts 12/4/2012 | 8:27:31 PM
re: How Ciena Won TyCom mary,

i'm afraid you and your analysts don't have a clue. ciena won this one from lucent, and you don't even mention them.

how many times do we have to hear about corvis' non-existent grooming switch. there's something to be said about a 1000 word article length, but realize its intelligent readers on the other end too.
big daddy 12/4/2012 | 8:27:28 PM
re: How Ciena Won TyCom Actually...

An STS-1 has a bit rate of 51.84 Mbps. Also, SDH's starts at, and supports multiples of, 155.52 Mbps (i.e., three times the rate of an STS-1) - this is an STM-1.
jghutchison 12/4/2012 | 8:27:28 PM
re: How Ciena Won TyCom Here is a clue for you.

STS-1 is SONET/SDH protocol describing the lowest bit rate unit of 55 Megabits per second. All other SONET bit rates are muliples of STS-1.

Are you sure there is intelligent life out there.

JGH
cfaller 12/4/2012 | 8:27:27 PM
re: How Ciena Won TyCom "Ciena won this one from Lucent, and you don't even mention them."

First of all, I doubt that TyCom didn't put RFPs out to Nortel and Corvis on this one, so Lucent isn't the only one that got beat.

Second of all, I bet Lucent wasn't mentioned because they don't have a plan (at least I haven't heard of one) for integrating the ultra-long haul DWDM with grooming, etc., which was the point of the article.
flanker 12/4/2012 | 8:27:26 PM
re: How Ciena Won TyCom Tycom has been familiar with Ciena's product for at least two years. Shoot, they installed ciena optical products for ESAT Ireland last year and that project was in the works since 1999.

I doubt they even seriously looked at anyone else.

optinuts 12/4/2012 | 8:27:17 PM
re: How Ciena Won TyCom note the article now says sts1 and not sds1.

as the other posters have said, sdh does not support sts1, rather stm1 is the lowest rate.

my comment was this is an article with no content. it doesn't even list the major competitors. so whats the point?

enough beating this dead horse. see you all around.
rredfield 12/4/2012 | 8:27:11 PM
re: How Ciena Won TyCom http://messages.yahoo.com/bbs?...

>>cfoe - Ciena cash flow analysis
by: BenGrahamMan 05/10/01 12:34 pm EDT
Msg: 190045 of 190045

I saw your post on SI.

http://www.siliconinvestor.com...

I truly look forward to your views on the Cash flow and the rest of the report. I have always enjoyed your posts. Here is the detailed Ciena report that cfoe refers to.


http://boards.fool.com/Message...

If you havent read this report (author remains unknown), I urge you all to read it. I don't necessarily agree with the entire report, but it did bring out some excellent issues and consolidated a bit of history that is Ciena relevant.

It was interesting to read the following post by JGH on SI. He has a tendency to create FUD, yet accuses others of creating FUD (fear, uncertainty and doubt).


http://www.siliconinvestor.com...


>>To:cfoe who wrote (10961)
From: jghutchison Thursday, May 10, 2001 11:02 AM
Respond to of 10962

Michael,
A word or caution on dealing with that character. He uses numerous aliases and writes to himself for no other reason than to provoke controversy and spread around a little FUD.

The TMF post had his tracks all over it. A regular piece of garbage hardly worthy of further interest.

I would like to see your analysis, but I'd hate to see you caught up in that crapola. FWIW.

Jack

<<

JGH makes up more LIES about me having other aliases when he knows I do not. He says the TMF post has my tracks all over it , when I think most of you understand that I did not write the report, I had no knowledge of the report written and I still do not know who the author of the report is.

JGH acts macho , but in my book and most of yours, we all know he is a scu* B*g.

do your own dd, bring up the questions, and make your own investment decisions.
<<

My alias on other boards is BenGrahamMan
I am also rbco on the Gilder Boards. That's it. This JGH claims to never read my posts, creates lies about me. He reminds me of the bully in Toy Story.
camc 12/4/2012 | 8:26:49 PM
re: How Ciena Won TyCom why don't have Sycamore?
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