Infinera: Thinking Packet-Optical?
The company has a P-OTS under development, combining optical transport with Multiprotocol Label Switching (MPLS), according to analyst Natarajan "Subu" Subrahmanyan of SMH Capital. The product wouldn't hit the market until 2011, he writes.
The report includes revelations based on meetings with Infinera's management -- including a bit about Huawei Technologies Co. Ltd. that we'll get to in a second.
Infinera hasn't talked about joining the P-OTS club. The product plans it's openly discussed -- and recently gave the world an update on -- are a metro version of its DTN optical transport system and a 40-Gbit/s update to the DTN. (See Infinera Talks Metro, 40-Gig.)
The 40-Gbit/s product won't be ready until 2011, Subrahmanyan guesses. That's a late start, considering Nokia Networks and Nortel Networks Ltd. have already gotten 40-Gbit/s products out the door. (See NSN Unveils Unified Optical Platform and Nortel Rolls On With 40-Gig.)
But Subrahmanyan doesn't think that will hurt Infinera in the long run, because the high cost of 40 Gbit/s is helping to defer most of the market demand.
"We believe the lack of a 40-Gbit/s system has come in the way of Infinera's ability to penetrate [AT&T Inc. (NYSE: T) and Verizon Communications Inc. (NYSE: VZ)]," he writes. "However, we do not believe Infinera will miss the bulk of the 40-Gbit/s market opportunity due to these timing issues."
As for Huawei, the Chinese vendor recently won a long-haul optical transport contract with Level 3 Communications Inc. (NYSE: LVLT), one of Infinera's earliest customers. (See Is Huawei in at Level 3?)
Speculation was that the 40-Gbit/s gap was to blame, but Subrahmanyan claims Huawei won the deal primarily on price.
Infinera has recently added more business with customers Global Crossing (Nasdaq: GLBC) and XO Communications Inc. , Subrahmanyan points out. That could indicate that the Level 3 loss isn't a sign that a price war is about to smack Infinera, he writes. (See Infinera Goes Underwater and XO Upgrades With Infinera.)
— Craig Matsumoto, West Coast Editor, Light Reading