When Cisco Systems recently published the specifications of its Network Convergence System 1002 (NCS 1002), it theoretically could be called a Data Center Interconnection (DCI) “killer,” but only for a few of the high-end content service providers, which are heavily involved with 100G. Yet shortly afterwards, Coriant announced its Groove G30 platform, which it also characterizes as “game-changing,” and according to its specs, will offer a similar capacity density, as well as comparable inputs and outputs. Nevertheless, for 10G and 40G clients, which represents the vast majority of the rest of the DCI business, the advantages for both companies over other vendors is, practically speaking, negligible or non-existent. (Furthermore, on longer spans beyond the capability of 16-QAM and 250-gig per channel, Fujitsu Network Communications' 1FINITY T100, along with the G30, offer the same density as the 1002.)
The principal hurdle for both Coriant and Fujitsu is that they are new to the DCI sector, currently lack sufficient knowledge as to how their businesses are run, and are more used to drawn-out decision-making by the public network operators. Obviously, Cisco has historical relationships in the space in general with its sales of routers and switches.
Although Cisco has been in the optical transport business for over 15 years, it is once again striving for the first time to truly become one of the main players in terms of supplying such systems. In the past, it was able for a little while to make a good amount of money selling proprietary OC-768/40G interfaces, as part of its routing and transmission gear. Eventually, it entered the 100G space through its purchase of both CoreOptics (for coherent detection technology) and of Lightwire to obtain “silicon photonics,” resulting in its introduction of its CPAK components. (However, in terms of market share, Cisco never became one of the leading long-haul transmission systems integrators for carriers.)
The current Executive Chairman of the Board of the company, John Chambers, (when he was still the CEO) somewhat strangely stated, "No one thought we were even in this game,” in reference to metro 100G as well as the NCS solution. Actually, it had the effect of one prominent blog site mistakenly posting then, “Optical is a new market for Cisco.”
There is no doubt that the top leadership of Cisco would prefer to characterize its historic position in the marketplace in that way. After all, the firm was in effect taken to the cleaners on the deal for Cerent in 1999, which was just a next-generation, barebones type of SONET ADM with relatively limited penetration with customers (as well as unprofitable) at the time. In today’s dollars, the Cerent deal approaches $10 billion. (Over the years, Cisco’s focus on its routing solutions, and the lack of sufficient development of the ONS 15454, were instrumental in not getting a higher return on its initial investment.)
Given its less than stellar past performance across the board when it comes to optical, it makes one wonder why it decided to enter the DCI space. Did it feel compelled based on the tremendous hype about how quickly the market is growing from both industry analysts and the customers themselves? Perhaps it decided there was little to lose in that there is not much growth, if at all, in traditional telecom, and that it would take a minimal amount of investment to become a player.
Cisco does have an advantage over other DCI vendors in that it can keep its internal costs lower in producing 100G optics for both the line and client sides. Still, the best betting is that given that it potentially can offer the most value in an extremely high-end niche (for probably a short period of time because the more established vendors will eventually catch up), and taking into consideration that it has not been prone to get into pricing battles, history is likely to repeat itself, and Cisco may once again not wind up becoming a leading competitor.
[written by Mark Lutkowitz]