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MRV Takes Packet-Optical Path

A year after re-examining its business, MRV decides to stick with networking, driven partly by a strong play in service provider IT

Craig Matsumoto

August 22, 2012

3 Min Read
MRV Takes Packet-Optical Path

MRV Communications Inc. (Nasdaq: MRVC) likes its chances with optical and Ethernet equipment, but its real shot at survival might be more a matter of service provider information technology (SPIT).

The company announced last week that its Optical Communications Systems (OCS) business will be the "new" MRV. In other words, it's keeping its optical transport and Carrier Ethernet gear, while divesting its Network Integration business.

That's the result of about a year's consideration, during which it was possible MRV could have sold off OCS. (See MRV Considers Its Exit.)

Optical networking has not been a particularly kind market in recent years, and Carrier Ethernet is rife with competitors, especially given MRV's focus on access equipment.

But MRV has won contracts with large carriers over the years, partly because of its Pro-Vision management system. The software can handle tens of thousands of devices, the kind of scale that's attracted Tier 1 carriers, says Michael Howard, principal analyst with Infonetics Research Inc.

"They have a pretty loyal customer base, and they've been able to get some major projects in Tier 1s, so it's not like they're just talking to Tier 2 and Tier 3 players," Howard says.

MRV is also encouraged by the fact that the requirements for optical have gotten a little simpler.

"We've seen that evolve to something more about pure packet on transport and not having so much concern about having Sonet/SDH integrated in the backbone of the system," says Dave Stehlin, president of OCS. (Stehlin, former CEO of Ceterus, joined MRV as senior vice president of sales and marketing in 2011.)

Naturally, MRV would also like to take a shot at packet-optical transport systems (P-OTS), which would combine the Ethernet and optical halves of OCS -- again, without having to worry any more about Sonet/SDH.

OCS is profitable for now, but that might change as MRV puts money into the business, including an investment in Pro-Vision's development, Stehlin says.

As for the Network Integration piece, it just never became a cohesive business. It consisted of acquired pieces in Italy, France and Switzerland, each focused on subsets of the market. "There was no across-the-board strategy for how we would run a network integrator business," Stehlin says.

Those pieces will now be sold off. (See Euronews: MRV to Sell Euro Assets.)

While MRV might not be the very first name you think of in optical or Ethernet, Howard thinks the company has a shot.

"They have a lot of good technology inside and they have some really good lower-cost optical gear I think they can leverage," Howard says. "I do believe MRV is a survivor type of company. They do have a good set of products. They've made a number of changes over the years to help them, for example, in the Ethernet space they sell a fair amount of mobile backhaul and what we call EADs [Ethernet access devices]."

Stehlin was reluctant to say how many employees remain at OCS. The count was 300 as of Dec. 31, according to the company's 10-K filing with the Securities and Exchange Commission (SEC) .

— Craig Matsumoto, Managing Editor, Light Reading

About the Author(s)

Craig Matsumoto

Editor-in-Chief, Light Reading

Yes, THAT Craig Matsumoto – who used to be at Light Reading from 2002 until 2013 and then went away and did other stuff and now HE'S BACK! As Editor-in-Chief. Go Craig!!

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