Cisco’s Lost Opportunity in Optical Space

Implications: 1.      After spending several billion dollars on Cerent some years ago, Cisco Systems did not fully take advantage of the SONET product. 2.      Unfortunately, the large vendor has a habit of telling telcos what they need instead of listening to what they want. 3.      If Cisco had paid better attention, it probably could have derived substantially more revenue from what became the ONS 15454.

Analysis:  As the source article points out, Cisco Systems is still getting new sales for its 454.  Yet, even some minor refinements would have made a difference in growing its installed base of the product.  

The really negative experience came for the first buyers of the 454.  Network planners are fully cognizant of the future repercussions with going with any product with serial numbers that are in the first 100.  Certainly, at the time, the initial 454 boxes were a third of the price of other SONET gear.  At such a low cost, it was a good, enabling solution.  However, the initial purchases would have perhaps just software release 1.1 or 1.3 on it.  There would certainly be penalties to be paid for the first few years of using the equipment.  

Compounding this experience was the irritation felt by engineers because their  complaints were not heard.  One big issue was the relatively simple request of taking it from a 19-inch chassis and putting in into a 23-inch one because in the former, the carrier could not get all of the bandwidth out of it that the system could carry.   

One service provider, which had been an early customer, and had become 100 percent Cerent on the SONET side for a while, has close to 200 nodes of the product.  Instead of bothering to upgrade them, it actually plans to forklift them next year because it will wind up being cheaper to do so.  The carrier cannot get the benefit from the latest software from Cisco because of the limitations of the backplane.