The pure optical transport market is not growing and it may not for a while, said Steve W. Chaddick - Ciena's Chief Strategy Officer speaking at last week's UBS conference in New York. Advances in optical technology have been so successful that is very cost effective to build "huge" capacity networks with DWDM. In order to grow in a relatively flat market, Ciena's strategy is to expand into new markets. It is not good enough to be a niche player, said Chaddick, because service providers are seeking long term relationships with a few key suppliers and they are looking to solve "the convergence problem" between the different layers of their infrastructure. For this reason, Ciena has acquired two companies this year and announced strategic partnerships with two others. Its acquisition of WaveSmith Networks provided a multiservice switching platform that is deployed in 15 networks, including ILECs. Its acquisition of Akara networks provided it with a SAN over SONET/SDH solution. Ciena is also partnering with Laurel Networks for edge routing and with Luminous Networks for multi-service provisioning platforms for RPR and SONET/SDH. The extended portfolio means that Ciena's market opportunity is now much larger than before. This represents a fundamental shift for Ciena, said Chaddick, and reflects the service providers' need to gain better control over the edge of the network. He noted that traffic volumes continue to grow while the overall revenue per bit continues to drop. However, OPEX per bit has not dropped at the same pace, creating a fundamental problem for the service providers. The solution, Chaddick argues, is better service adaptation at the edge, with layers 1, 2 and 3 of the network converging into a common control plane.http://event.streamx.us/event/alpha.asp?Event=ubs20031117
