India's data boom is paying off nicely for Ciena. Last year, network expansion and upgrades by the country's operators fueled a 50% increase in revenues for the optical equipment maker, making India the company's fastest-growing market.
Ciena Corp. (NYSE: CIEN) is aiming to maintain that level of growth over the next two to three years. And while telco capex has been falling in many parts of the world, it continues to rise in India.
"We believe the growth will continue and what we are seeing now in India is clearly an inflection point where significant investment is underway," says Gary Smith, Ciena's CEO, in an exclusive interview with Light Reading.
To meet demand, Ciena has plans to double the size of its Indian workforce to about 2,000 employees. By mid-2017, it is set to have completed its move into a bigger office facility in Gurugram.
Soaring sales are not the only reason Ciena is so excited about India, however. "When I look at the architecture that we are rolling out for some of the players in India it is basically leading edge, which is being implemented here first," says Smith. "We are really excited about some of the things we are doing here."
Although about 37% of Ciena's revenues now come from non-telco clients, service providers account for a bigger share of its business in India than elsewhere. Moreover, India's population of 1.2 billion means the scale of the networks is much bigger than in most other markets, with most consumers relying on mobile technologies to use Internet services.
"A key reason why the Indian market demands leading-edge technology is because of the scale. Also, the architecture has missed fixed line and has gone straight to mobile," says Ryan Perera, who heads up Ciena's India business. "We also have to put in a lot of intelligence in the network so that when issues actually crop up, it is self healing and intelligent."
Smith is optimistic that India will be able to sustain a high level of growth for Ciena in the years ahead, as the ecosystem moves beyond satisfying requirements for basic connectivity.
"Once you have got connectivity in place, the opportunity then is to look at things like artificial intelligence and data analytics," he says.
A drop in telco spending is a growing problem for vendors across the globe, but Smith regards this as part of a "natural evolution."
"The technology is bringing down the cost," he says. "With virtualization, it is more around software and around the cost of managing the network. We have done a good job of driving down the cost of bandwidth and therefore telcos don't need to spend as much on capex. That has also pushed out a lot of our competitors."
Digital transformation by other businesses also means that Ciena now has a lot more customers. Having originally focused on carriers, the company is now serving content providers, enterprises and government bodies, among others. "Less competitors, more customers, and that's why Ciena continues to grow," quips Smith.
At a global level, Ciena still competes mainly against Huawei Technologies Co. Ltd. and Nokia Corp. (NYSE: NOK). It acquired Cyan Networks last year to bolster its virtualization capabilities, and it remains open to more takeover opportunities to support growth and competitiveness. "We are investing hugely organically but I wouldn't rule out acquisitions in the software space in the next five years," says Smith.
It is almost impossible to talk to Smith without asking him about his journey as Ciena's head honcho for more than 17 years. "The year I took over we had the nuclear winter in telecom -- the revenues came down from $1.5 billion to $300 million," he says, in discussing his greatest achievements. "A lot of companies have gone since then and to come out as number one or two in every single market we play in… I think that is my strongest achievement."
"A big part of that was getting the Nortel acquisition, which gave us global scale in 2010 and doubled the size of the business," he adds. "And it has been built on really a fabulous team that we have put together."
— Gagandeep Kaur, contributing editor, special to Light Reading