Summary
We wrote back in April that "Infinera’s credibility is at its most threatened state since starting up...." In July, its CEO stepped down. Infinera is almost like two companies.
Analysis
We also said in 2007 that Infinera needs to develop a pure 40G chip. In July, Light Reading reported indications that lack of a native 40G solution is a key reason why it may have lost Level 3's business. Unfortunately for Infinera, the supplier does not appear to be taken seriously by carriers regarding any briefings on 40/100G anymore. The vendor's previous presentations to consultants at high-speeds were often confusing, and arguably, misleading.
One part of Infinera is the good ole boy executive crowd that was earlier involved in successful startups and believes they can do no wrong. To a large extent, some of these people have been kept in the dark about the shortcomings over the years of the Infinera solution. It was not a totally smooth situation at Level 3 even before the 40G issue came to a head. There was a couple of systems that apparently caught on fire and there were evidently some initial glitches in upgrading products in the field. The other portion of the company is totally aware of such problems.
Nevertheless, Level 3 still raves about the simplicity of the product in terms of deployment and turning it up. No competitor has really approached the vendor regarding ease of use, of provisioning, of management, and of expansion.
In order to get new Tier 1 contracts, such as from Deutsche Telekom, it seems that
Infinera has also been trying to diversify its portfolio into the optical switching space, desiring to compete head to head with Ciena. If one looks at the history of the majority of executives at Infinera, it makes sense from an expertise standpoint. They were all formerly Lightera/Ciena people, which developed the CoreDirector. It is questionable
As of today, nothing has been seen or heard about a viable cross-connect product being readied for the marketplace. It was supposedly going to be a lot more compact than a CoreDirector. One obstacle would have been making it work effectively with other suppliers’ DWDM solutions. In addition, getting a broadband cross-connect onto a chip has obviously been much more challenging than originally believed by the manufacturer. It is very possible that it has been very difficult to expand the limited fabric that is in its DTN. In the meantime, Infinera is struggling with its primary business.
The good news is that the new CEO of the firm is a very operations-centric, nuts and bolts type of person. There will inevitably be more focus at the company on efficiency as opposed to strategic vision. The industry observers that are optimistic about Infinera’s future will point to all of the chassis it has out in the field that need to be filled (including at Level 3).
As far as the source article is concerned, Mr. Martin is more of a company man than a mover and a shaker. It could explain why he succeeded at a more conservative company, Fujitsu, than with the other vendors.
Samuel Greenholtz consults with leading institutions through GLG
Analyses are solely the work of the authors and have not been edited or endorsed by GLG.
