Gary Smith, CEO, Ciena

LR: You've had a string of good quarters. Is Ciena just willfully conservative in its estimates, or are you as surprised as everyone else when you beat the forecasts?

Smith: I think what we're dealing with is an industry that's moving very quickly, so I think our value proposition is very well appreciated by our customers. We've had multiyear growth of 20 percent-plus in the last few years, and we've taken our gross margins up significantly over the last several years. We've had a couple of quarters along the way where our gross margins have gone down, so we're just mindful of that. We try to call it as best we can, and I wouldn't call 20 percent growth conservative, especially when compared to some of our competitors.

LR: About the World Wide Packets acquisition – what was it that you saw in that company to put up such a premium for the business?

Smith: If you were to sum it up in one word, it would be software. When we looked at the company they had a great implementation of what I would describe as an Ethernet operating system, with all of the attributes of that, and they have invested considerable money in implementing that over the last few years. Their ability to manage the Ethernet environment was just... We've never seen anything else like that. So really, that was one of the prime attractions to us.

Plus, they have all of the platforms that fit into that: the aggregation, switching, and access platforms. But the way they've approached the software architecture we just think is incredibly scaleable.

LR: How much of that can we expect to be integrated into your existing platforms?

Smith: You know, that's a good question. [Ed. note: Thanks!] And the answer to that question is: a lot. We've done some of our own software development in this area as well. Put that together with some of the mesh software architecture we have, together with the programmable ports on some of our hardware platforms, and you've now got a complete Ethernet operating system that allows you to deliver and reconfigure services and manage services in a way that we don't think anybody else can.

LR: How much of that was based on WWP's support of PBT [Provider Backbone Transport (PBT), also called PBB-TE]?

Smith: PBT is clearly a part of it – it's part of the whole package – but that's not what really differentiates it. It's the software management, the service-level agreement software, and all of that stuff, and the network management elements as well as the pure PBT.

LR: How has customer reaction been to the acquisition news?

Smith: It has been very favorable, from their existing customers. You know, clearly they see someone like Ciena coming in there and guaranteeing continuity of supply and the resources, so they can continue to invest in and develop this software platform. That comes from our customers as well. We're seeing plenty of opportunity to cross-sell the platform and the software packaging.

And it fits in perfectly. That service delivery piece was really one of the things that we wanted to get on board, because we've got the mesh architecture, we've got the converged metro Ethernet piece, and really getting a robust solution added to our service delivery was critical.

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