Qualcomm of San Diego and Cerent based in Petaluma, respectively, brought these solutions to the forefront in 1998, and both CDMA- and MSPP-based solutions would soon dominate the competitive landscape. Even legal challenges from Sweden’s Ericsson against Qualcomm and Japan’s Fujitsu against Cerent (Cisco, by then) fizzled. The Qualcomm and Cerent innovations would take the world by storm and become the standard-bearers for embracing an Internet Protocol (IP) world.
Qualcomm led the ‘IP + Wireless’ foray, for Ericsson, while Cerent drove the ‘IP + Optical’ thrust, under the Cisco banner. Ironically, in keeping with the old adage, “If you can’t beat them, join them,” Ericsson ultimately secured the Qualcomm patents and manufacturing facilities for $4B in May 1999 as a way to lead global deployment of CDMA. Similarly, Cisco acquired Cerent outright in November 1999 for $6.9 billion to become a global player in the optical transport market.
Industry watchers witnessed a similar drama being played out in the optical transport segment. Sterling Perrin told me in 2014, “For Cisco, in telecom, [Cerent] was probably their smartest acquisition. It built what is really Cisco’s optical business today, still built around that Cerent platform, which has evolved, but that is still why Cisco is in optics.” The Cerent 454 MSPP replaced the traditional voice-based SONET standard. It provided a four times improvement in space, a 50 percent reduction in power consumption, and the ability to transport and switch both voice and data on the same platform without the need for outboard switching systems.
At the heart of these market disruptions were Application Specific Integrated Circuits, ASICs, for short. Qualcomm reportedly “reduced all the digital signal processing for CDMA into one [ASIC].” Their digital signal processing technology located a particular ‘message’ across a wide swath of spectrum captured by one broadband radio. Qualcomm was the first to incorporate the TCP/IP Internet protocols into every CDMA handset.
Similarly, Cerent developed three ASICS for its initial product in order to pack in more features with an even lower heat signature in a more compact form factor than previous generation optical transport boxes. The Cerent 454 was the first MSPP to reach the market and this solution was readily received by service providers to the tune of $1 billion in sales by 2000.