I N F O N E T I C S          R E S E A R C H            S U R V E Y           E X C E R P T SService Providers NameTop Opt...
I N F O N E T I C S                                     R E S E A R C H        S U R V E Y                E X C E R P T S ...
SERVICE PROVIDER FAMILIARITY WITH VENDORS          Though familiarity with a vendor’s offering does not necessarily transl...
I N F O N E T I C S                                            R E S E A R C H                                 S U R V E Y...
As with overall optical leadership, after two years in the top spot Alcatel-Lucent was recognized as the top 40/100G vendo...
I N F O N E T I C S                                            R E S E A R C H                                 S U R V E Y...
Exhibit 5: Top Three Vendors: Optical Control Plane Technology (G-MPLS, ASON)                         Alcatel-Lucent      ...
I N F O N E T I C S                                              R E S E A R C H                                 S U R V E...
Leadership ranking key takeaways:               •	 Overall results are similar to last year’s, with the exception of Alcat...
I N F O N E T I C S                                     R E S E A R C H       S U R V E Y                E X C E R P T S  ...
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2012 optical-leadership

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2012 optical-leadership

  1. 1. I N F O N E T I C S R E S E A R C H S U R V E Y E X C E R P T SService Providers NameTop Optical Vendors 2012By Andrew SchmittPrincipal Analyst, OpticalInfonetics ResearchINTRODUCTION 2TOP TAKEAWAYS 2SERVICE PROVIDER FAMILIARITY WITH VENDORS 3 Exhibit 1: Service Provider Familiarity with Optical Equipment Vendors 3SERVICE PROVIDERS NAME TOP VENDORS 4 Exhibit 2: Top Three Equipment Vendors 4 Exhibit 3: Top Three Vendors: Coherent (40G/100G+) Transmission Technology 5 Exhibit 4: Top Three Vendors: OTN Switching Technology 6 Exhibit 5: Top Three Vendors: Optical Control Plane Technology (G-MPLS, ASON) 7IMPORTANT PRODUCT FEATURES THAT SET VENDORS APART 7 Exhibit 6: Evaluating New Vendors—Important Features 8EQUIPMENT VENDOR LEADERSHIP BY CATEGORY 8 Exhibit 7: Optical Transmission and Switching Equipment Supplier Leadership 9BOTTOM LINE 9METHODOLOGY AND DEMOGRAPHICS 9
  2. 2. I N F O N E T I C S R E S E A R C H S U R V E Y E X C E R P T S “This year’s results are materially different from last year’s, as Alcatel-Lucent consistently improved its position relative to competitors, particularly in OTN switching and 40/100G coherent technology, while improving its customer perception on pricing.” INTRODUCTION Amidst the noise of marketing lingo and endless positioning, in the end the only thing that matters is what customers perceive and the decisions they make as a result. Infonetics’ annual optical leadership survey is an attempt to cut through the chatter by discovering which optical equipment companies are perceived by service providers to be the leaders, and by understanding service providers’ decision criteria hierarchy. TOP TAKEAWAYS • Alcatel-Lucent seized several leadership positions after years of dominance by Ciena, and was the most-cited company when service providers were asked to name overall optical technology leaders and leaders in specific technologies. • Though Alcatel-Lucent was named most often, Ciena was named as a top-three vendor nearly as often in 40G/100G+ coherent technology and OTN switching, and was equally recognized in optical control plane technology. • Huawei is in third place in 40G/100G+ coherent technology and is tied for second in OTN switching, but is the second most- frequently named company as an overall leader in optical equipment. • Infinera is consistently in fourth place behind these three larger vendors in most leadership areas and has the best ratio of “evaluating” versus “installed,” as twice as many respondents are evaluating their systems when compared to those who have installed them. • Price and total cost of ownership top the list of criteria for selecting new vendors, and R&D investment and financial stability on average are dead last. Though respondents generally agree about the importance of price and cost, their rankings of reliability, financial stability, and R&D investment are across the board. THE 2012 SURVEY Each year Infonetics Research surveys service providers for their opinions on which optical vendors are seen as the leaders in a number of categories. This is a summary of some of the results from our September 2012 Optical Equipment Vendor Leadership: Global Service Provider Survey, in which we interviewed 20 service providers globally that represent 28% of 2011 worldwide telecom capex and revenue. 70% of this year’s respondents participated in our 2011 survey as well. This is important to consider when comparing data year over year.© I N F O N E T I CS R E S E A R C H , I N C . SEPTEM BER 2012 2
  3. 3. SERVICE PROVIDER FAMILIARITY WITH VENDORS Though familiarity with a vendor’s offering does not necessarily translate into contract wins, vendors need buyer awareness to be evaluated as potential vendors. Without a degree of familiarity, vendors don’t even get invited to the table. Respondents rated their familiarity with each of a list of optical transmission and switching equipment vendors on a scale of 1 to 7, where 1 is not familiar and 7 is definitely familiar, a measure called aided awareness. The percentage of respondents rating each vendor a 6 or a 7 or definitely familiar, is shown in the exhibit below. Half or more of respondents are familiar with three optical transmission and switching equipment vendors: Alcatel-Lucent (65%), Huawei (60%), and Ciena (55%), as shown in Exhibit 1. The fragmented nature of the optical equipment business is clearly evident, with this leading cluster of vendors followed by a few niche providers. Geographical specialization by equipment companies as well as success in certain carrier verticals has created a balkanized landscape. Exhibit 1: Service Provider Familiarity with Optical Equipment Vendors Alcatel-Lucent Huawei Ciena Tellabs Infinera Cisco Nokia Siemens Networks ADVA ZTE Fujitsu Ericsson ECI 0% 10% 20% 30% 40% 50% 60% 70% Percent of Respondents Rating 6 or 7 or “Definitely Familiar” Source: Infonetics Research, Optical Equipment Vendor Leadership: Global Service Provider Survey, September 2012 I N F O N E T I C S R E S E A R C H S U R V E Y E X C E R P T S© I N F O N E T I CS R E S E A R C H , I N C . SEPTEM BER 2012 3
  4. 4. I N F O N E T I C S R E S E A R C H S U R V E Y E X C E R P T S SERVICE PROVIDERS NAME TOP VENDORS In a series of open-ended questions, we asked service providers to name the three leading optical vendors in several categories. This was followed by a fifth open-ended question asking what features service providers consider to be most important when evaluating new vendors. Alcatel-Lucent, Ciena, Huawei Identified as Leaders in Overall Optical Equipment After taking the top position for the past two years, Ciena ceded the top spot to Alcatel-Lucent, with 18 of 20 respondents naming them as an industry leader. Ciena, Huawei, and Infinera were named as leaders by roughly the same number of respondents this year and last, but Alcatel-Lucent rose from 78% to 90%. Following these companies are a number of companies named by one respondent (5%) each. Exhibit 2: Top Three Equipment Vendors Alcatel-Lucent Ciena Huawei Infinera Tellabs Cisco Ericsson Fujitsu Nokia Siemens Networks ZTE 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% Percent of Respondents Source: Infonetics Research, Optical Equipment Vendor Leadership: Global Service Provider Survey, September 2012 Alcatel-Lucent Takes Top Spot in 40G/100G Transmission Technology Coherent technology is a major area of R&D focus and differentiation among equipment and component vendors, and is the focus of our next question, an open-ended one in which respondents named the equipment or component companies they consider to be the three leaders in coherent 40G/100G+ transmission technology.© I N F O N E T I CS R E S E A R C H , I N C . SEPTEM BER 2012 4
  5. 5. As with overall optical leadership, after two years in the top spot Alcatel-Lucent was recognized as the top 40/100G vendor. But rather than Alcatel-Lucent rising past a stationary Ciena, Alcatel-Lucent gained and Ciena slipped slightly. Some of this may be accountable to the slightly greater tilt toward EMEA respondents at the expense of North America. Huawei and Infinera scored about the same as last year, but Cisco vaulted from 11% last year (two respondents) to 30% this year (six respondents)—a substantial gain, particularly considering the greater EMEA response rate this year. This reflects Cisco’s success with the coherent 40/100G Coreoptics acquisition. Exhibit 3: Top Three Vendors: Coherent (40G/100G+) Transmission Technology Alcatel-Lucent Ciena Huawei Cisco Infinera Nokia Siemens Networks ZTE Tellabs 0% 20% 40% 60% 80% 100% Percent of Respondents Source: Infonetics Research, Optical Equipment Vendor Leadership: Global Service Provider Survey, September 2012 Alcatel-Lucent Posts Surprisingly Good OTN Switching Results In a new question this year, we asked respondents to who they consider to be the top three vendors in OTN switching technology. As with our coherent ratings, Alcatel-Lucent edged out Ciena, who tied with Huawei for second. Huawei and Ciena are well known and respected OTN vendors with the OSN8800 and 5430, respectively, but Alcatel was slow out of the gate relative to these vendors with the upgraded 1830 after the maligned 1870 project. The market appears to view Alcatel-Lucent as a peer to these two companies, which was a surprise. I N F O N E T I C S R E S E A R C H S U R V E Y E X C E R P T S© I N F O N E T I CS R E S E A R C H , I N C . SEPTEM BER 2012 5
  6. 6. I N F O N E T I C S R E S E A R C H S U R V E Y E X C E R P T S Infinera also posted respectable results, with seven respondents naming them as a leader. Given their smaller relative size, clearly Infinera has significant mindshare in switching. This is respectable for a company which is commonly thought of as an optical transport innovator. Though the DTN-X is the flagship OTN switch, the DTN had significant switching features that probably shaped carrier perceptions. Exhibit 4: Top Three Vendors: OTN Switching Technology Alcatel-Lucent Ciena Huawei Infinera Cisco Fujitsu Tellabs ZTE Nokia Siemens Networks 0% 10% 20% 30% 40% 50% 60% 70% Percent of Respondents Source: Infonetics Research, Optical Equipment Vendor Leadership: Global Service Provider Survey, September 2012 Optical Control Plane Results Mirror OTN Switching Results Maybe this shouldn’t be too much of a surprise, but vendors that ranked well for optical control plane performed well in OTN switching. Customers evaluating or considering OTN switching are simultaneously looking to upgrade how they manage their networks, and vendors of OTN products recognize this and are making investments in the software to manage and control these new networks. One possibility is that the management software is considered to be as important as the OTN switching hardware it is designed to control. Decisions about deploying OTN switching may also be gated by a carrier’s ability to transition to a new control plane.© I N F O N E T I CS R E S E A R C H , I N C . SEPTEM BER 2012 6
  7. 7. Exhibit 5: Top Three Vendors: Optical Control Plane Technology (G-MPLS, ASON) Alcatel-Lucent Ciena Huawei Infinera Cisco Tellabs Infinera Nokia Siemens Networks ZTE 0% 10% 20% 30% 40% 50% 60% 70% Percent of Respondents Source: Infonetics Research, Optical Equipment Vendor Leadership: Global Service Provider Survey, September 2012 IMPORTANT PRODUCT FEATURES THAT SET VENDORS APART After asking service providers to identify the leading vendors in several areas, we wanted to understand what features are most important when they evaluate vendors—the features that typically set them apart. Last year we switched to an open-ended response methodology we felt yielded more interesting and useful data, and we used that approach again. We then tallied the responses in logical groups as listed in the next chart. As last year, many responses cluster around generalized words such as “features,” “performance,” and “flexibility.” We classified these responses as “performance, flexibility, general features.” 100G features jumped from 17% last year to 25% this year, still pretty low considering the 100G design activity underway. It is surprising how often people simply used the word “scalability”—3 of 10 respondents cited this. Control plane features were named by only 30% of respondents, down from 61% last year. This is a dramatic shift that we cannot account for— it simply isn’t at the forefront of people’s thoughts this year. L2 features, OTN/ODU switching, and price/cost all dropped from last year as well. Service and support ranked surprisingly low last year and dropped farther this year. Exactly like last year, only one respondent cited “vendor stability,” in marked contrast to equipment vendors’ comments. We predominantly interviewed network architects, who don’t have much responsibility for supporting products five years down the road—perhaps that accounts for its low showing. I N F O N E T I C S R E S E A R C H S U R V E Y E X C E R P T S© I N F O N E T I CS R E S E A R C H , I N C . SEPTEM BER 2012 7
  8. 8. I N F O N E T I C S R E S E A R C H S U R V E Y E X C E R P T S Exhibit 6: Evaluating New Vendors—Important Features Performance, flexibility, general features Price/cost and density Control plane and network management Scalability 100G features OTN/ODU switching features ROADM features L2 features Service and support 0% 10% 20% 30% 40% 50% 60% Percent of Respondents Source: Infonetics Research, Optical Equipment Vendor Leadership: Global Service Provider Survey, September 2012 EQUIPMENT VENDOR LEADERSHIP BY CATEGORY In addition to asking respondents to rank the eight vendor selection criteria in terms of importance, we asked them to name individual leaders for each criterion. This was a prompted question—respondents could choose up to three vendors for each criterion, from a provided list of 12 vendors. The three responses were given in no particular order or ranking. The next table shows the three vendors named the most for each criterion. Exhibit 7: Optical Transmission and Switching Equipment Supplier Leadership Criteria Number 1 Number 2 Number 3 Technology Alcatel-Lucent Ciena Infinera Pricing Huawei ZTE Alcatel-Lucent Service and support Alcatel-Lucent Ciena Huawei Product reliability Alcatel-Lucent and Ciena (tie) Huawei Financial stability Ciena Huawei Cisco Management tools Alcatel-Lucent Ciena Infinera R&D investment Ciena Huawei Alcatel-Lucent Total cost of ownership Huawei Alcatel-Lucent and Ciena (tie)© I N F O N E T I CS R E S E A R C H , I N C . SEPTEM BER 2012 8
  9. 9. Leadership ranking key takeaways: • Overall results are similar to last year’s, with the exception of Alcatel-Lucent taking leadership from Ciena in technology, and improving in pricing. • Alcatel-Lucent was named as a leader in management tools by four-fifths of respondents and posted a significant gap over all vendors, including a strong second-place showing by Ciena. • Annual pricing favorites Huawei and ZTE are in the top two again, though Alcatel-Lucent moved up from last year, and last year’s number-three vendor ADVA dropped. • Infinera posted good results for technology innovation, landing slightly below Alcatel-Lucent and Ciena, closer to them than last year. Infinera is low in financial stability, though the company has a decent balance sheet. • Cisco posted decent results in technical areas as well as total cost of ownership, and did well (third place) in financial stability. BOTTOM LINE Not only are Alcatel-Lucent, Ciena, and Huawei the top three companies in terms of international optical hardware market share, service providers view them as leaders in the industry. But this year’s results are materially different from last year’s, as Alcatel- Lucent consistently improved its position relative to competitors, particularly in OTN switching and 40/100G coherent technology, while improving its customer perception on pricing. Ciena was in the position of undisputed optical technology leader for the prior two years, so this is a material change. It should also be noted that during 2012, Alcatel-Lucent should out-ship Ciena 2:1 in coherent 100G ports, so product volume supports the change in 100G conclusions. Huawei consistently ranks in the top three except in technology and network management, though it does rank third in nascent optical control plane technology. Infinera continues a trend of ranking relatively high given its smaller size, and Cisco improved its relative standing, particularly in 100G. METHODOLOGY AND DEMOGRAPHICS In July and August of 2012, using online, telephone, and in-person survey methods, we interviewed 20 service providers that represent a statistically significant 28% of 2011 worldwide revenue and capex in our Service Provider Capex, Revenue, and Capex by Equipment Type report. Our sample includes a mix of incumbent (70%), competitive (20%), and independent wireless (10%) telcos, with 50% based in Europe, the Middle East, and Africa (EMEA); 25% in North America; 15% in Asia Pacific; and 10% in Central and Latin America (CALA). Each service provider interviewed has an optical transport network, and each respondent has detailed knowledge of their companies’ 10G/40G/100G optical transmission and switching equipment, and has influence in planning and making purchase decisions for optical transmission and switching equipment. I N F O N E T I C S R E S E A R C H S U R V E Y E X C E R P T S© I N F O N E T I CS R E S E A R C H , I N C . SEPTEM BER 2012 9
  10. 10. I N F O N E T I C S R E S E A R C H S U R V E Y E X C E R P T S SURVEY AUTHOR AND LEAD ANALYST Andrew Schmitt Principal Analyst, Optical Infonetics Research andrew@infonetics.com | +1 (408) 583.3393 | twitter.com/aschmitt ABOUT INFONETICS RESEARCH Infonetics Research is an international market research and consulting analyst firm serving the communications industry since 1990. A leader in defining and tracking emerging and established technologies in all world regions, Infonetics helps clients plan, strategize, and compete more effectively. Services • Webinar, Conference, and Event Speaking • Market Share, Market Size, and Forecasts • Custom Brand and Demand-Side Market Research • Enterprise/SMB and Service Provider Survey Research • Custom Market Size and Forecasts • Continuous Research Services • Technology and White Papers • Service Provider Capex and Subscriber Analysis and Forecasts • Competitive Analysis and Due Diligence • Consulting, Retainers, and Quick Consults Coverage Areas • Mobile and Wireless • Networking Ports • Small Cells and Carrier WiFi • Vendor Services • Mobile Backhaul and Microwave • Service Provider Capex and Subscribers • Service Provider VoIP and IMS • Data Center and Cloud • Broadband Access • Security • Pay TV • Enterprise Networks • Service Enablement and Subscriber Intelligence • Enterprise Voice, Video, and Unified Communications • Carrier Routing, Switching, and Ethernet • Equipment Vendor Scorecards • Optical • Overall Market Trends and Forecasts SALES • Western North America, Asia, Latin America: Larry Howard, Vice President: larry@infonetics.com, +1 408-583-3335 • Eastern North America, Texas, Midwest: Scott Coyne, Senior Account Director: scott@infonetics.com, +1 408-583-3395 • Europe, Middle East, Africa: George Stojsavljevic, Senior Account Director: george@infonetics.com, +44 755-488-1623 • China 中国: 宋后清, 市场分析师 / Jeffrey Song, Market Analyst and Sales Support: jeffrey@infonetics.com, +86 21.3919.8505 • Japan 日本 アナリティクスリサーチ / Takashi Kimura, TAK Analytics: takashi.kimura@takanalytics.com, +81 3-6408-5566 • South Korea 대한민국 문덕대 대표이사 / Doug Moon, MBAP: dougm@mbap.co.kr, +82 2-3453-9400 • Taiwan 台灣: 基泰國際有限公司 / Keng-Hao Chang, Hinton Information: kenghao.chang@hintoninfo.com, +886 2-2799-3110 x239 695 TECHNOLOGY PARKWAY SUITE 200 CAMPBELL, CA 95008 TEL 408.583.0011 FAX 408.583.0031 www.infonetics.com SILICON VALLEY – BOSTON METRO – AMSTERDAM – GREATER LONDON – TOKYO – SHANGHAI© I N F O N E T I CS R E S E A R C H , I N C . SEPTEM BER 2012

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