Ciena/Nortel Product Plans Revealed

SAN DIEGO -- OFC/NFOEC 2010 -- Ciena Corp. (NYSE: CIEN) will turn Nortel Networks Ltd. 's Optical Multiservice Edge (OME) 6500 into a flagship optical product, while giving its own new 5400 a starring role in its packet-switching plan.

Ciena is revealing its new product strategy today, the first working day after completing the acquisition of Nortel's Metro Ethernet Networks (MEN) assets. (See Ciena Beats NSN to Buy Nortel's MEN, Ciena Closes Nortel MEN Purchase, and Nortel Sells MEN, Loses Man.)

Nortel gets a prominent role in optical transport, and its 40- and 100-Gbit/s technology will overshadow Ciena's. But for the most part, it's Ciena gear that dominates the future plans.

Table 1: Ciena/Nortel Product Plan
Product Area Focus Products Also-Rans
  • OME 6500 (Nortel)
  • CN 4200*
  • Carrier Ethernet
  • CN 3000: access
  • CN 5000: aggregation
  • MERS 8600 (Nortel)
  • Packet Optical Switching
  • 5400 (Ciena)
  • CoreDirector FS (Ciena)
  • MERS 8600 (Nortel)
  • Packet Optical Transport
  • OME 6500
  • CN 4200*
  • Optical Metro 5200 (Nortel)*
  • 100G
  • Nortel DP-QPSK with coherent detection
  • Ciena's direct-detection scheme and in-progress coherent scheme
  • Source: Ciena
    * Ciena's CN 4200 and Nortel's OM 5200 are being targeted at enterprise applications, managed services, and some metro WDM situations.

    The biggest surprise is the retreat of the CN 4200 -- although Tom Mock, Ciena's senior vice president of strategic planning, says the box is being diminished only in scope. It's sold mostly into enterprise and managed-services markets so far, and its new mission (and future R&D) will be mostly limited to those areas.

    Still, that's a surprise when it comes to packet-optical transport systems (P-OTS), according to Heavy Reading analyst Sterling Perrin.

    "With the OME 6500 positioned as the metro infrastructure line, it will become the combined company’s metro P-OTS play -– a move we did not predict. To us, it appeared that the CN 4200 line was further down the P-OTS path compared to the OME 6500," Perrin writes in a research note issued today.

    At OFC/NFOEC this week, Ciena will be showing the 4200 and 6500 managed as a common platform, Mock says.

    The big loser in the plan would appear to be the Nortel Metro Ethernet Routing Switch 8600, which takes a back seat to Ciena's own switches, such as the new 5400. (See Ciena Catches Packet/Optical Convergence Bug.)

    Older products -- such as Ciena's CoreStream or the Nortel Optical Metro 3500 -- aren't being discontinued, but neither do they figure in Ciena's R&D plans. They'll live on, to serve the installed base. "If a product's already in manufacturing, there's little to be saved by shutting it down," says Mock.

    Your 100G vs. mine
    Looking over the new roadmap, it's clear Nortel's 40- and 100-Gbit/s technology, based on Coherent detection, was a key part of the deal for Ciena. Perrin speculates that that's why the OME 6000 line is getting such a prominent role.

    Ciena had 100-Gbit/s work in progress, too, but it was targeting enterprise needs for low latency and short distance. Those requirements played out in the deployment for the New York Stock Exchange (NYSE) , for instance. (See Ciena Sending 100GE Live.)

    Nortel attacked carrier long-haul needs, leading to a coherent DP-QPSK implementation that's been praised by analysts and has been a factor in multiple 100-Gbit/s trials. (See Verizon Switches On 100G in Europe and Telstra Trials 100G With Nortel.)

    Ciena's plan is to adopt that technology for shorter 100-Gbit/s reaches.

    "The current 100-Gbit/s Ciena's got is going into the applications we've sold, but the primary platform will be the Adaptive Optical Engine from Nortel," Mock says.

    On the software front, Ciena wants a common platform, but that doesn't mean migrating Nortel's gear completely to Ciena software. Rather, the plan is to give the products' software similiar attributes, creating a consistency that will help them work together. "In the same way PowerPoint works on a PC or on a Mac."

    Ciena does intend to put all its products under the same management tools, and it's going to move the Nortel gear to the OneOS concept of a common, multilayer control plane.

    On the personnel front, Philippe Morin, president of Nortel's MEN, will be joining the Ciena executive team, as noted earlier. (See Morin's Plan: Stick With Ciena.)

    His role will be significant: He's been put in charge of R&D, manufacturing, and product development -- in short, all of Ciena's products are now in his hands.

    Finally, there's the matter of money. One problem analysts had with the Ciena/Nortel combination was the wreckage it might leave on Ciena's balance sheet. (See Nortel's MEN: Winners & Losers.)

    But Ciena wound up "in a pretty good position financially," Mock insists.

    Ciena issued $250 million in debt with the intention of using it to replace the original debt that was part of its bid for MEN. (The deal specifically allowed this.) The new offering was oversubscribed, so Ciena brought in $375 million, giving the company a cash buffer. (See Ciena Tees Up $250M Notes Sale and Ciena Prices Notes.)

    — Craig Matsumoto, West Coast Editor, Light Reading

    Pete Baldwin 12/5/2012 | 4:40:50 PM
    re: Ciena/Nortel Product Plans Revealed

    "You'll see from these slides that we have totally integrated graphical elements."

    -- Joe Berthold of Ciena, delivering a presentation today at the OSA Executive Forum.

    (He was joking; his slides were about 400G and Terabit, and didn't reference the Nortel acquisition at all.)

    Most of the integration plan seems pretty obvious, except the more limited ambitions for the 4200.  Anyone else have a reaction to Ciena's plan so far?

    paolo.franzoi 12/5/2012 | 4:40:49 PM
    re: Ciena/Nortel Product Plans Revealed

    Well, Craig - what has been shown is not an integration plan.  It is more of a outline of a product strategy.  Things like Ops, IT, and Customer Service are not part of this plan.  I would not expect them to comment greatly on this stuff but that is where the rubber meets the road.

    The real question is what happens to customers of the "also rans".





    njguy 12/5/2012 | 4:40:48 PM
    re: Ciena/Nortel Product Plans Revealed

    Ciena has made no significant enhancements to the 4200 platform since they laid off the former IPI team that developed it.  (Those ever-slipping schedules will be met any day now.)  IMO, something is broken in engineering.

    It'll be interesting to see if they keep the engineering talent behind the Nortel products.



    somedumbPM 12/5/2012 | 4:40:48 PM
    re: Ciena/Nortel Product Plans Revealed

    I am a little confused by the MERS 8600 references.  As I understood it, the MERS sw load was written with PBT in mind, but of course the 8600 hw (a ATM based router) is now in the hands of Avaya.  I had already assumed I would never hear of this again.

    I think the Connect DX and HDX are possibly the also rans for the Packet Optical Switching.

    The 6100 series should be listed in the carrier ethernet section on one side or the other.

    I think anyone that used Preside and/or PMEM knew its days were numbered years ago.

    Being an ex-Norteler (been out for about 7 years now) on both the RBOC Central Office Voice Switch and RBOC Optical/Carrier Ethernet sides and since building and maintaining networks with that gear I am vastly more well versed on the Nortel side than the Ciena side.  So it is hard for me to make any comments on the Ciena gear.

    There were no dedicated Nortel Optical offices outside of maybe Dorval, and that was when more of the gear was made in house, so I assume there were little to no dedicated IT and back office depts in recent times.  From a US perspective, only Major Accounts had any dedicated Optical Customer Service Reps and the number on Major Accounts is smaller than before now that the RBOC are reconverging.  I think most of the exisiting PLM and Tech Support people are moving over which I think is a good sign as they have contiually proven themselves to be an asset.  But all of the best people from Optical Ops were the first to be let go back in 2001-02 ensuring the downfall would continue. 

    DCITDave 12/5/2012 | 4:39:31 PM
    re: Ciena/Nortel Product Plans Revealed

    From Mark Sue (RBC Capital) this morning:

    * Due to merger accounting rules, Ciena may not be allowed to assume Nortel's existing unrecognized deferred revenue. As a separate entity, Ciena's deferred revenues totaled $81M last quarter, while Nortel maintained $285M in deferred as of its F4Q09. Our understanding is that Nortel's deferred revenues go to zero.

    I haven't heard that before but it may be old news. Anyone care to explain what that means for Ciena?

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