Tom Fallon is Infinera’s Chief Executive Officer, a former employee of Cisco when it was in startup mode. As a follow-up to the release of my book, The Upstart Startup: How Cerent Transformed Cisco, we talked about a couple of things surrounding packet-optical transport in a new light.
Rob Koslowsky: “How does ‘Innovation continually re-invent Infinera’ today, in keeping with how Cerent transformed Cisco in the early 2000s?”
Tom Fallon: “I don’t think we’re reinventing. We’ve approached this a little bit like Cerent from one perspective. You guys used to always hype ‘simple, fast and easy,’ in terms of the customer experience. Today we call it ‘the Infinera experience’ and it’s a combination of technology innovation, excellent operational execution, high quality, and intense customer support.”
“I think that’s part of our DNA, I think it was’s part of Cerent’s DNA. I don’t believe it really transformed Cisco into that DNA, however, because I still don’t think they think holistically about the customer experience. They might think they do, but they really don’t.”
“We’re trying to take our core technology and the success we’ve created in a specific market space and adapting that to transcend into adjacent market spaces . . . We’re going to evolve our product portfolio by integrating packet capabilities and SDN capabilities, bringing out new products optimized by market feedback and notching up what the definition of transport companies have historically been.”
“From the perspective of customer experience focus, Cerent and Infinera have a lot of parallels. I’m not convinced we are creating a transformation in our company or reinventing our company. I think we’re evolving our company. There is a pretty significant difference in my mind.”
Rob Koslowsky: “Infinera’s recently announced move to enter the metro transport space produced a déjà vu moment for me. Your strategy is reminiscent of Ciena’s 1999 attempt to expand from long-haul to metro, when that long-haul innovator failed to do so with its acquisition of Cyras. Acquisitions are often a great way to achieve continued organic growth. Why did you choose to develop a metro transport product internally versus acquiring a company to fill this need?”
Tom Fallon: “We are moving into two different metro markets – the first is metro cloud often referred to as data center interconnect and driven by the large Internet content providers. The second is the metro aggregation market, which is the more traditional metro market driven by telcos and cable operators. I’m not opposed to acquiring, but all the core technologies that we have in our current long-haul market and all the customer experience around ‘simple, fast, and easy,’ to use the terms of Cerent, are applicable in these adjacent markets. We don’t have to get a new trick; we don’t have to get a new DNA; we don’t have to have a different customer experience. We have to leverage a customer experience and a competency we already have into a next-door opportunity. What our customers want is more of what we got in a package that solves a smaller scale problem.”
Rob Koslowsky: “Last year, media reports highlighted that Windstream (an early adopter of Cerent’s metro product when this national service provider was known as Alltel) was still using Cyan in the metro, but making a home for Infinera in the ‘long-haul portions’ of Windstream’s network. So Infinera’s push into the metro was a clearly telegraphed message to its competitors that it was pursuing an aggressive adjacent market strategy.”
Tom Fallon: “My belief is that, as we become very significant in our current market, make sure we’re profitable in that current market, and then take that bag of tricks into adjacent opportunities where you can start leveraging our investment across a broader market opportunity. If you go too broad, too fast, you don’t become great at something or a significant market-share holder to have influence. We now have 140+ customers and a big chunk of those are going to buy the next Infinera experience. It doesn’t mean we’re not interested in acquisitions, but our vertically integrated model results in product standards that are extremely high and so for the markets we’re bringing this technology to, there is not an acquisition that scratches that itch.”
Rob Koslowsky: “On the cloud and rise of Software-Defined Networking (SDN) . . . Does SDN create a drag for your hardware sales momentum? It sure has dampened Cisco and Juniper’s high-margin sales lately.”
Tom Fallon: “SDN for us is an additive to our capability and I believe actually makes optical more strategic; it links the transport layer to a higher-level layer that consists of virtualized network functions. You can’t virtualize the creation and movement of photons. To send a photon from A to B, to transport it, you have to use our optical transport gear or someone else’s gear. Funadamentally, scalable optics becomes the foundation of next generation networks and because we have a PIC that uniquely provides an incredible amount of scalable, adaptable, and dynamic bandwidth, we have an advantage."
“Our Intelligent Transport Network solutions are designed to be highly software controllable and exposing that to SDN control has been very straight forward for us. The faster SDN happens, the faster it becomes important, the better off we are, because we can use SDN to control our highly scalable optical network already and respond very aggressively to that opportunity. You’ll see us rolling out SDN product this year and I think that market is finally starting to get ready.”
Rob Koslowsky: “So what about Cisco and Juniper and the growing threat of router bypass where photons can be taken to the right place without multiple stops (read extra latency) in between?”
Tom Fallon: “Routing and switching can be virtualized. It can be put in the cloud. The more that happens and as it’s distributed, the more transport you need to interconnect that stuff. The faster SDN happens, two things happen: 1. You need more packet optical transport, and 2. Dollars are freed up from buying overly expensive routers and you can buy more transport. It probably hurts Juniper. It probably hurts Cisco. It’s great for us and it’s probably good for Ciena.”
“In general we see a world in the future where most higher layer network functions are virtualized in data centers with those data centers connected over converged packet optical networks.”
Rob Koslowsky: “Isn’t the Ciena metro play simply a Nortel offering reborn? Philippe Morin was a key optical contributor at the now defunct Nortel. He remains at Ciena to this day.”
Tom Fallon: “Absolutely. What you got rid of was Ciena. It’s still Nortel. Ciena is gone. We got rid of one competitor; it’s just not who people think.”
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Postscript: The results, at least this snapshot for 2014, reported in February 2015, tell the tale: Infinera, which research firm Infonetics said “was the fastest growing optical company in the West (North America and EMEA combined), grew revenue 23 percent over 2013, followed by Ciena at 12 percent . . . Cisco's optical revenue was up 2.4 percent for the year.”
Tom Fallon: “I don’t think we’re reinventing. We’ve approached this a little bit like Cerent from one perspective. You guys used to always hype ‘simple, fast and easy,’ in terms of the customer experience. Today we call it ‘the Infinera experience’ and it’s a combination of technology innovation, excellent operational execution, high quality, and intense customer support.”
“I think that’s part of our DNA, I think it was’s part of Cerent’s DNA. I don’t believe it really transformed Cisco into that DNA, however, because I still don’t think they think holistically about the customer experience. They might think they do, but they really don’t.”
“We’re trying to take our core technology and the success we’ve created in a specific market space and adapting that to transcend into adjacent market spaces . . . We’re going to evolve our product portfolio by integrating packet capabilities and SDN capabilities, bringing out new products optimized by market feedback and notching up what the definition of transport companies have historically been.”
“From the perspective of customer experience focus, Cerent and Infinera have a lot of parallels. I’m not convinced we are creating a transformation in our company or reinventing our company. I think we’re evolving our company. There is a pretty significant difference in my mind.”
Rob Koslowsky: “Infinera’s recently announced move to enter the metro transport space produced a déjà vu moment for me. Your strategy is reminiscent of Ciena’s 1999 attempt to expand from long-haul to metro, when that long-haul innovator failed to do so with its acquisition of Cyras. Acquisitions are often a great way to achieve continued organic growth. Why did you choose to develop a metro transport product internally versus acquiring a company to fill this need?”
Tom Fallon: “We are moving into two different metro markets – the first is metro cloud often referred to as data center interconnect and driven by the large Internet content providers. The second is the metro aggregation market, which is the more traditional metro market driven by telcos and cable operators. I’m not opposed to acquiring, but all the core technologies that we have in our current long-haul market and all the customer experience around ‘simple, fast, and easy,’ to use the terms of Cerent, are applicable in these adjacent markets. We don’t have to get a new trick; we don’t have to get a new DNA; we don’t have to have a different customer experience. We have to leverage a customer experience and a competency we already have into a next-door opportunity. What our customers want is more of what we got in a package that solves a smaller scale problem.”
Rob Koslowsky: “Last year, media reports highlighted that Windstream (an early adopter of Cerent’s metro product when this national service provider was known as Alltel) was still using Cyan in the metro, but making a home for Infinera in the ‘long-haul portions’ of Windstream’s network. So Infinera’s push into the metro was a clearly telegraphed message to its competitors that it was pursuing an aggressive adjacent market strategy.”
Tom Fallon: “My belief is that, as we become very significant in our current market, make sure we’re profitable in that current market, and then take that bag of tricks into adjacent opportunities where you can start leveraging our investment across a broader market opportunity. If you go too broad, too fast, you don’t become great at something or a significant market-share holder to have influence. We now have 140+ customers and a big chunk of those are going to buy the next Infinera experience. It doesn’t mean we’re not interested in acquisitions, but our vertically integrated model results in product standards that are extremely high and so for the markets we’re bringing this technology to, there is not an acquisition that scratches that itch.”
Rob Koslowsky: “On the cloud and rise of Software-Defined Networking (SDN) . . . Does SDN create a drag for your hardware sales momentum? It sure has dampened Cisco and Juniper’s high-margin sales lately.”
Tom Fallon: “SDN for us is an additive to our capability and I believe actually makes optical more strategic; it links the transport layer to a higher-level layer that consists of virtualized network functions. You can’t virtualize the creation and movement of photons. To send a photon from A to B, to transport it, you have to use our optical transport gear or someone else’s gear. Funadamentally, scalable optics becomes the foundation of next generation networks and because we have a PIC that uniquely provides an incredible amount of scalable, adaptable, and dynamic bandwidth, we have an advantage."
“Our Intelligent Transport Network solutions are designed to be highly software controllable and exposing that to SDN control has been very straight forward for us. The faster SDN happens, the faster it becomes important, the better off we are, because we can use SDN to control our highly scalable optical network already and respond very aggressively to that opportunity. You’ll see us rolling out SDN product this year and I think that market is finally starting to get ready.”
Rob Koslowsky: “So what about Cisco and Juniper and the growing threat of router bypass where photons can be taken to the right place without multiple stops (read extra latency) in between?”
Tom Fallon: “Routing and switching can be virtualized. It can be put in the cloud. The more that happens and as it’s distributed, the more transport you need to interconnect that stuff. The faster SDN happens, two things happen: 1. You need more packet optical transport, and 2. Dollars are freed up from buying overly expensive routers and you can buy more transport. It probably hurts Juniper. It probably hurts Cisco. It’s great for us and it’s probably good for Ciena.”
“In general we see a world in the future where most higher layer network functions are virtualized in data centers with those data centers connected over converged packet optical networks.”
Rob Koslowsky: “Isn’t the Ciena metro play simply a Nortel offering reborn? Philippe Morin was a key optical contributor at the now defunct Nortel. He remains at Ciena to this day.”
Tom Fallon: “Absolutely. What you got rid of was Ciena. It’s still Nortel. Ciena is gone. We got rid of one competitor; it’s just not who people think.”
----- ----- ----- -----
Postscript: The results, at least this snapshot for 2014, reported in February 2015, tell the tale: Infinera, which research firm Infonetics said “was the fastest growing optical company in the West (North America and EMEA combined), grew revenue 23 percent over 2013, followed by Ciena at 12 percent . . . Cisco's optical revenue was up 2.4 percent for the year.”