As more service providers trim the number of network vendors they use, they’re counting on the suppliers they do keep to know not just old-school TDM technologies, but also the next-gen IP world. Ciena Corp. (CIEN) says it’s perfectly positioned as one of those companies, now that it’s taken over bankrupt Nortel Networks’ Metro Ethernet Networks unit.
On Friday, Ciena closed the $773.8 million acquisition of Nortel’s optical division. Ciena won the assets at a heated auction in late November, squeezing out rival Nokia Siemens Networks for the rights to products, intellectual property and employees. Most industry experts agreed Ciena was the best fit for the Nortel holdings, but many also worried Ciena had taken on too much execution risk amid what one financial analyst called “uneven opex discipline.” Ciena is acknowledging those concerns, without giving them too much weight. The key to this historic deal, the Maryland-based manufacturer says, is that carriers have a doubled-in-size partner as communications traffic becomes all-IP.
“Ciena is the market leader in core switching and Nortel is the market leader in metro optical and long-haul, so we’ve brought that together,” said Dave Parks, Ciena’s director of product marketing, in an interview on Friday. “That’s giving our customers the ability to buy ... integrated capabilities.”
To that point, Ciena has grouped its products and Nortel’s into five categories: packet-optical transport; packet-optical switching; carrier Ethernet service delivery; software; and services. Ciena has not “end-of-lifed anything” as part of the transaction, Parks said, which means the company will continue to support the Nortel equipment that Nortel itself has not discontinued. In fact, Ciena’s main internal concern is R&D, Parks said.
“All we’ve done is prioritized our R&D investments, and if you look at where we prioritized, it makes sense because networks are moving to more higher-capacity, packet-optimized infrastructure,” he said. Ciena wants to provide operators and businesses with fewer devices that handle more bandwidth, Parks explained, “so we’re very focused on things like 100G ... and automating the network to enable faster time to market, reduce manual intervention and help take down operational costs.”
Turning Tarnished Nortel Into Ciena Gold
Even as it makes headway on the product side, Ciena continues to work to ease misgivings about its ability to manage a Nortel integration.
First up, perceptions of the tarnished Nortel brand.
“We’ve talked to a lot of customers about their feelings on this and almost all the feedback is very positive going forward,” Parks said. “There’s always going to be somebody who disagrees with a certain aspect of something.”
Perhaps what’s most interesting is the findings of the “perception studies” Ciena conducted in the months between the auction win and the deal’s close to gauge users’ views of Ciena and Nortel. Without fail, Nortel ranked high on inventiveness, Parks said.
