Only Lucent and Nortel possessed all of these technologies of the future while both Ascend and Cisco were limited in their optical capabilities. Cisco’s lack of optical was reiterated just two weeks later when r.h.k. reported that Nortel Networks led in both the SONET and DWDM sectors with 34 percent and 29 percent market shares, respectively. Nortel also occupied first place in the delivery of combined SONET/DWDM solutions in North America, with an impressive 67 percent market share. Cisco knew it had a major product hole and had to fill it, especially after Ascend was absorbed by Lucent.
Cisco cast about the startup ecosystem and made nominal investments in many young companies, eventually liking what they saw at startup Cerent in Sonoma County’s wine country. By early 1999, Cisco went after the Petaluma-based startup with a vengeance, and ultimately acquired the privately-held company for $6.9 billion by November 1999.
Cisco used Cerent’s product to fill the gaping hole in optical identified by r.h.k., but more so, to engage the service provider marketplace it had been trying to crack without much success since 1995. The routing and switching firm gained the added benefit of acquiring an optical company that produced a product, regardless of whether traffic feeding it was shaped by IP, ATM, or Frame Relay devices. Cerent’s SONET-based multi-service provisioning platform (MSPP) could transport all traffic types across the service providers’ optical infrastructure, unlike other optical providers. Cisco had upped the ante on both Nortel and Lucent.
In 1998, who could have predicted that Cisco’s IP solution would dominate the world of telecommunications or that Cerent’s optical solution, nurtured within Cisco, would alter the course of optical transport solutions the world over? This surprising turn of events manifest itself in the form of IP + Optical, followed by Cisco COMET, for Complete Optical Multiservice Edge and Transport, to accelerate the deployment of next generation IP + Optical networks.