fibeReality, LLC announced in a newly published study that the world’s leading optical system vendor in the world, Ciena, is facing a huge challenge in the restructuring of a hefty portion of its business. Ciena’s Clash with Cannibalization at Webscale Operators says the supplier’s initial, near-term obstacle right now seems to be inadequately responding to the optics demands of the hyperscale data center operators, such as Google and Microsoft, for a 400-gigabit ZR (400ZR) coherent pluggable module — the total world market for this component, fibeReality projects to grow to $175 million in 2023.
“While Ciena’s international competitive position for high-performance, monolithic systems has never been better in its history, as its major competitors, including Huawei Technologies, Nokia Networks, and Infinera, are currently struggling, those large cloud providers will be increasingly deploying such capabilities into very small form factors like the 400ZR, which can be quickly commoditized,” said Mark Lutkowitz, Principal at fibeReality. “The key question for Ciena is to what degree it is willing to continue down the same path with the upcoming 400ZR+, which will grow much larger in sales than the 400ZR, as well as later with higher data rates, such as 800ZR.”
The report contends that a legitimate, longer-term option for Ciena is to pull back from the webscale operators to maintain its gross margins at current levels. fibeReality also asserts that much of the revenue loss could be recovered with further penetration into incumbent Internet Service Providers (ISPs) in Europe, Asia, and other parts of the globe, potentially facilitated by one or more acquisitions of smaller players.
A major conclusion of the report is that a change in the top leadership might be required in order to execute on a such a monumental change in its corporate strategy.
The 30-page publication costs $500 and can be purchased at https://www.fibereality.com/store.
fibeReality, LLC is an independent research and consulting firm specializing in optical equipment and services including in telecommunications, datacom, consumer, automobile, AR/VR, and other markets. For more information, visit https://www.fibereality.com/.