Network TransformationBrian ProtivaAnaheim, March 19th, 2013
Why am I here today?2   © 2013 ADVA Optical Networking. All rights reserved.
Is this a garage?3   © 2013 ADVA Optical Networking. All rights reserved.
ADVA Optical Networking‟s founding site 19944           © 2013 ADVA Optical Networking. All rights reserved.
… and today‟s award winning R&D site and factory5             © 2013 ADVA Optical Networking. All rights reserved.
So why are you all here?6   © 2013 ADVA Optical Networking. All rights reserved.
And where do you want to be?7    © 2013 ADVA Optical Networking. All rights reserved.
Do we have our Mojo?8   © 2013 ADVA Optical Networking. All rights reserved.
What Was Our Framework in the „90s?    Millions              >50,000 engineers                                     Tens of...
What Was in Our Toolbox?         Components                                                                      Systems  ...
Who Were the Innovators in the „90s?                           16 x 2.5Gbit/s                               DWDM     OC-19...
What Happened in the New Millenium?     The burst of the dot-com bubble made many names disappear12                   © 20...
1997 Did the Class of 1997-99 Graduate?                             1998                                                  ...
A Right Hook With a Left Uppercut?        China‟s national icons become industry leaders14               © 2013 ADVA Optic...
So Where Are We Today?         Components – Systems – Operators15           © 2013 ADVA Optical Networking. All rights res...
What Is in Our Optical Toolkit Today?         Components                                                                  ...
What Happens in One Internet Minute?17          © 2013 ADVA Optical Networking. All rights reserved.
What Macro Environment Do We Face?       Financial sector and                   Fiscal consolidation                      ...
What Is Coming Our Way?         Billions                             Trillions                                  Millions  ...
What Are the Growth Drivers?     Mobility                                   7                                             ...
What Are the Growth Drivers?      HD Video                      “Verizon’s wireline group now has                      8.8...
What Are the Growth Drivers?      Enterprise                                     70                                       ...
What Are the Growth Drivers?                                                                                             5...
What Is the State of Our Industry?                                                    Content                             ...
What About Our Customers?25         © 2013 ADVA Optical Networking. All rights reserved.
Carriers – Karma or Drama?26          © 2013 ADVA Optical Networking. All rights reserved.
What Is Wrong With Growth?             U.S. PROFESSIONAL CONTENT           CONSUMPTION OVER THE INTERNET           GB VOLU...
What Is Wrong With Growth?                            Unit Revenue & Unit Cost Trends                                     ...
Do Enterprises Differ From a Carrier?29           © 2013 ADVA Optical Networking. All rights reserved.
What Pain Do Enterprises Feel?30          © 2013 ADVA Optical Networking. All rights reserved.
Where Do We Go From Here?                                 ?31         © 2013 ADVA Optical Networking. All rights reserved.
Quo Vadis Networking?               2020: ICT = $5 trillion         $1.7 trillion larger than it is today                 ...
Quo Vadis Networking?          80% of the industrys growth will                  be driven by the            cloud & mobil...
Quo Vadis Networking?          Rapid expansion of emerging          markets start to dominate our                   opport...
Quo Vadis Networking?           We are in the social networking era       supported by the Steve Jobs mobile device       ...
Quo Vadis Networking?       Within this context what do we have to         do in order to get dramatic growth           ba...
Quo Vadis Networking?     Programmable application                                       •    Dynamic services        awar...
Quo Vadis Networking?     Components                                                                            Systems   ...
Innovation     From Static Networks to Dynamic Services     Multi-rate SW-defined transceiver                             ...
Innovation     From Static Networks to Dynamic Services     Silicon Photonics                                        Silic...
Quo Vadis Networking?                                                                                   Monetize          ...
Quo Vadis Networking?                           What Optical SDN/Openflow (OF) model                                      ...
Quo Vadis Networking?      We are the foundation for a green networked society43                © 2013 ADVA Optical Networ...
Quo Vadis Networking?                                                   Buffers, 5%                                       ...
Quo Vadis Networking?                                                                        Scalable, efficient capacity ...
Quo Vadis Networking?                               Vision     Speed                  Success                             ...
Which Solutions Do We as an Industry Need to Offer?47          © 2013 ADVA Optical Networking. All rights reserved.
Which Solutions Do We Need to Offer Within This Environment?48          © 2013 ADVA Optical Networking. All rights reserved.
Which Solutions Do We Need to Offer Within This Environment?49          © 2013 ADVA Optical Networking. All rights reserved.
Which Solutions Do We Need to Offer Within This Environment?50          © 2013 ADVA Optical Networking. All rights reserved.
Which Solutions Do We Need to Offer Within This Environment?51          © 2013 ADVA Optical Networking. All rights reserved.
A Call to Action as Performance is Relative52           © 2013 ADVA Optical Networking. All rights reserved.
How Will Our Competitive Landscape Evolve?     Further consolidation is likely, ultimately leading to higher industry marg...
Are We Being Recognized For Our Work?54          © 2013 ADVA Optical Networking. All rights reserved.
Are We All Working in a Commoditized Business?55          © 2013 ADVA Optical Networking. All rights reserved.
R&D Spendings     Company      2011                        Change from                 As of % of                  M US$  ...
Bandwidth is Growing57          © 2013 ADVA Optical Networking. All rights reserved.
Barriers to EntryComponents                                                                    Systems58           © 2013 ...
Gross Margin 2009-2012     60                            Gross Margin %     50     40                                     ...
What Are We Going to Do About This?http://www.google.com/finance  60                            © 2013 ADVA Optical Networ...
Are We in a Position to Brag?                                                       Content                               ...
My Five-Point Plan                              Mojo                           New Market                            Verti...
… and are we having fun while the pain lasts?63           © 2013 ADVA Optical Networking. All rights reserved.
Are We Having Fun While the Pain Lasts?64          © 2013 ADVA Optical Networking. All rights reserved.
Thank Youbprotiva@advaoptical.comIMPORTANT NOTICEThe content of this presentation is strictly confidential. ADVA Optical N...
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OFC/NFOEC: Network Transformation

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  • 2020, $5 trillion - $1.7 trillion larger than it is today 80% of the industry's growth will be driven by these 3rd platform technologiesRapidly expansion of Emerging Markets We are in the Steve Jobs mobile device era and the question is can it get any better?
  • OFC/NFOEC: Network Transformation

    1. 1. Network TransformationBrian ProtivaAnaheim, March 19th, 2013
    2. 2. Why am I here today?2 © 2013 ADVA Optical Networking. All rights reserved.
    3. 3. Is this a garage?3 © 2013 ADVA Optical Networking. All rights reserved.
    4. 4. ADVA Optical Networking‟s founding site 19944 © 2013 ADVA Optical Networking. All rights reserved.
    5. 5. … and today‟s award winning R&D site and factory5 © 2013 ADVA Optical Networking. All rights reserved.
    6. 6. So why are you all here?6 © 2013 ADVA Optical Networking. All rights reserved.
    7. 7. And where do you want to be?7 © 2013 ADVA Optical Networking. All rights reserved.
    8. 8. Do we have our Mojo?8 © 2013 ADVA Optical Networking. All rights reserved.
    9. 9. What Was Our Framework in the „90s? Millions >50,000 engineers Tens of of Users in the optical Thousands industry of Applications Internet LAN Client Server PC The Network What defined our industry?9 © 2013 ADVA Optical Networking. All rights reserved.
    10. 10. What Was in Our Toolbox? Components Systems • 2.5/10 Gbit/s • FOADM SONET/SDH • Fixed wavelength • Point to point lasers long haul 16/32 channel WDM • Discrete designs solutions and proporietary modules • DSLAMs with ever increasing • ASICs with data speeds millions of gates • ATM and IP systems And what did we build?10 © 2013 ADVA Optical Networking. All rights reserved.
    11. 11. Who Were the Innovators in the „90s? 16 x 2.5Gbit/s DWDM OC-192 CWDM Internet LAN Client Server PC The Network And what happened to our fantasy world?11 © 2013 ADVA Optical Networking. All rights reserved.
    12. 12. What Happened in the New Millenium? The burst of the dot-com bubble made many names disappear12 © 2013 ADVA Optical Networking. All rights reserved.
    13. 13. 1997 Did the Class of 1997-99 Graduate? 1998 1999 Atmosphere Alidian Appian Cerent (Cisco) Astral Point Centerpoint Chromatis Brightlink Coriolis Corvis Cyras Laurel Kestrel Siara LuxN ONI (Ciena) Sycamore Ocular Monterrey Xtera Metro Optix Tellium Sirocco Turin White Rock Source: Ovum/RHK Where are they now?13 © 2013 ADVA Optical Networking. All rights reserved.
    14. 14. A Right Hook With a Left Uppercut? China‟s national icons become industry leaders14 © 2013 ADVA Optical Networking. All rights reserved.
    15. 15. So Where Are We Today? Components – Systems – Operators15 © 2013 ADVA Optical Networking. All rights reserved.
    16. 16. What Is in Our Optical Toolkit Today? Components Systems • 100G coherent • Integrated and express layer Tunable solutions pluggables • Control planes • Switching to provision fabrics for networks and >10Tbit enable restoration • DSPs with 100 million gates • Rudimentary multilayer • Wavelength solutions selectable switches16 © 2013 ADVA Optical Networking. All rights reserved.
    17. 17. What Happens in One Internet Minute?17 © 2013 ADVA Optical Networking. All rights reserved.
    18. 18. What Macro Environment Do We Face? Financial sector and Fiscal consolidation Reduced growth rates governmental debt in high-income in the developing restructuring countries countries “Telecommunications is a facilitator of socio-economic advancement and is a critical utility for economic development, much like water and energy. This fact is reflected in its growing share of world output and of household spending.”* 2012 1990 2.8% of global GDP* 2.5% of global GDP* Global telecommunications spending as a share of global GDP *Source: The Insight Research Corp.: “The 2013 Telecommunications Industry Review: An Anthology of Market Facts and Forecasts”, December 2012.18 © 2013 ADVA Optical Networking. All rights reserved.
    19. 19. What Is Coming Our Way? Billions Trillions Millions of Users of Things of Applications • Consumers Industry solutions • Content • Enterprises • Services • Service providers • Gaming • … • Commerce • … Mobility Cloud Services Social Media Big Data Analytics The New Network Mobile devices and applications drive network requirements19 © 2013 ADVA Optical Networking. All rights reserved.
    20. 20. What Are the Growth Drivers? Mobility 7 6 5 4 Subscribers (billions) 3 2 1 Accessing the cloud 0 08 09 10 11 12 13 14 15 anywhere any time Mobile Mobile Broadband Fixed Broadband Fiber-based mobile backhaul w sync and caching20 © 2013 ADVA Optical Networking. All rights reserved.
    21. 21. What Are the Growth Drivers? HD Video “Verizon’s wireline group now has 8.8 million broadband subscribers, a 2.6 percent year-over-year increase. All of those gains, however, come from its FiOS fiber-to-the-home markets […] accounting for 5.1 million, or Personalized, on-demand 58% of its broadband connections.” HD content GigaOM, July 2012 Scalable energy-efficient residential broadband21 © 2013 ADVA Optical Networking. All rights reserved.
    22. 22. What Are the Growth Drivers? Enterprise 70 $5 Cloud 60 $4 50 Price per port per Gbps (US$k) $3 40 Exabytes/month (trillions) 30 $2 20 $1 CIOs and CFOs 10 Will Move to 0 $0 "Zero Capital" 2009 2010 2011 2012 2013 2014 and Transform Exabytes/month Cost of SP equipment change per year the IT Financial Model SLA-based, secure, high-performance access to the cloud22 © 2013 ADVA Optical Networking. All rights reserved.
    23. 23. What Are the Growth Drivers? 566 Mega Peak requests Data Center 370,000k+ per second 262 All applications always on 102 Q4 ‘11 Q4 ‘10 40 2.9 14 ‘09 ‘08 Total number of objects stored in Amazon S3, in billion Low-latency, encrypted data center connectivity23 © 2013 ADVA Optical Networking. All rights reserved.
    24. 24. What Is the State of Our Industry? Content Cloud high Service Services Providers Profitability Carriers IP Routing medium Relative Component Transport technological low Systems differentiation24 © 2013 ADVA Optical Networking. All rights reserved.
    25. 25. What About Our Customers?25 © 2013 ADVA Optical Networking. All rights reserved.
    26. 26. Carriers – Karma or Drama?26 © 2013 ADVA Optical Networking. All rights reserved.
    27. 27. What Is Wrong With Growth? U.S. PROFESSIONAL CONTENT CONSUMPTION OVER THE INTERNET GB VOLUME CAGR: 59% 192.6B GB REVENUE CAGR: 9-27% 10X 19.2B GB 2012 2017 Sources: VZ Internal Analysis, comScore June 2012, other sources27 © 2013 ADVA Optical Networking. All rights reserved.
    28. 28. What Is Wrong With Growth? Unit Revenue & Unit Cost Trends Revenue Network cost $ / GB Demand cost Moore‟s Law Sources: VZ Internal Analysis, comScore June 2012, other sources time Disparity of OTT traffic demand and revenue generation for the network provider is making the internet a zero sum game28 © 2013 ADVA Optical Networking. All rights reserved.
    29. 29. Do Enterprises Differ From a Carrier?29 © 2013 ADVA Optical Networking. All rights reserved.
    30. 30. What Pain Do Enterprises Feel?30 © 2013 ADVA Optical Networking. All rights reserved.
    31. 31. Where Do We Go From Here? ?31 © 2013 ADVA Optical Networking. All rights reserved.
    32. 32. Quo Vadis Networking? 2020: ICT = $5 trillion $1.7 trillion larger than it is today 132 © 2013 ADVA Optical Networking. All rights reserved.
    33. 33. Quo Vadis Networking? 80% of the industrys growth will be driven by the cloud & mobility applications No new structural changes are needed 2 Mobility Cloud Services Social Media Big Data Analytics The New Network33 © 2013 ADVA Optical Networking. All rights reserved.
    34. 34. Quo Vadis Networking? Rapid expansion of emerging markets start to dominate our opportunity 334 © 2013 ADVA Optical Networking. All rights reserved.
    35. 35. Quo Vadis Networking? We are in the social networking era supported by the Steve Jobs mobile device vision and an application for everything concept. Why would this not infiltrate networking? 435 © 2013 ADVA Optical Networking. All rights reserved.
    36. 36. Quo Vadis Networking? Within this context what do we have to do in order to get dramatic growth back into Optical Networking? What can we do to get our Mojo back? ?36 © 2013 ADVA Optical Networking. All rights reserved.
    37. 37. Quo Vadis Networking? Programmable application • Dynamic services aware networking? • Customer apps • Full plug & play • Virtualized network resources Network Open source agents and controller • Extendible control & virtualization framework FSP SW Suite Open northbound APIs Network control at your finger tips37 © 2013 ADVA Optical Networking. All rights reserved.
    38. 38. Quo Vadis Networking? Components Systems • Best of breed fully• Software defined flexible WDM Systems transceivers• Flexgrid ROADMs • Optical component dominated switches• Robust amplification and routers• Highly scalable software • Further integrations frameworks with on multilayer network structured North-bound elements interfaces • Software Defined• Active optical cables Networks (SDN) being• Silicon photonics run on commercial off the shelf hardware• Silicone based polymer38 © 2013 ADVA Optical Networking. All rights reserved.
    39. 39. Innovation From Static Networks to Dynamic Services Multi-rate SW-defined transceiver High-performance amplification x-Pol y-Pol Flexible grid ROADMs Control Plane/Openflow Fixed WDM Grid Flexible WDM Grid Increased spectral link efficiency39 © 2013 ADVA Optical Networking. All rights reserved.
    40. 40. Innovation From Static Networks to Dynamic Services Silicon Photonics Silicone-Based Polymer Active Optical Cables Graphene on Polymer40 © 2013 ADVA Optical Networking. All rights reserved.
    41. 41. Quo Vadis Networking? Monetize New network services Bandwidth Database Resource Network-based management analytics virtualization applications Network Applications Big data Policy Optimize management Operations Network utilization Service performance Transforming the network into a programmable, virtualized resource41 © 2013 ADVA Optical Networking. All rights reserved.
    42. 42. Quo Vadis Networking? What Optical SDN/Openflow (OF) model should we use? Use OF only to provision packet Use OF to provision flows over existing packet flows and optical paths optical layer resources Use OF to control each network element42 directly © 2013 ADVA Optical Networking. All rights reserved.
    43. 43. Quo Vadis Networking? We are the foundation for a green networked society43 © 2013 ADVA Optical Networking. All rights reserved.
    44. 44. Quo Vadis Networking? Buffers, 5% Concentrate L3+ in high SwitchPower driver: IP look- fabric density routers/switchesup/forwarding engine 10% (data centers) Power / HeatI/O optical transport: Control management Use wired (optical)much lower in power Plane 11% 35% access/backhaul incl.consumption than than point-to-multipointswitch fabrics I/O 7% solutions (WDM-PON)Wireless access power Implement real time IP look-up andconsumption: 10-20 monitoring and dynamic forwarding enginetimes higher than wired adjustment of power 32%solutions consumption Source: G. Epps, Cisco A transport-centric network is the most energy-efficient architecture44 © 2013 ADVA Optical Networking. All rights reserved.
    45. 45. Quo Vadis Networking? Scalable, efficient capacity 1Centralized intelligencetowards network apps 7 2 Service assurance Network functions virtualization 6 3 High energy efficiency Network optimization 5 4 Application-aware networks The future is wide open!45 © 2013 ADVA Optical Networking. All rights reserved.
    46. 46. Quo Vadis Networking? Vision Speed Success Innovation Flexibility46 © 2013 ADVA Optical Networking. All rights reserved.
    47. 47. Which Solutions Do We as an Industry Need to Offer?47 © 2013 ADVA Optical Networking. All rights reserved.
    48. 48. Which Solutions Do We Need to Offer Within This Environment?48 © 2013 ADVA Optical Networking. All rights reserved.
    49. 49. Which Solutions Do We Need to Offer Within This Environment?49 © 2013 ADVA Optical Networking. All rights reserved.
    50. 50. Which Solutions Do We Need to Offer Within This Environment?50 © 2013 ADVA Optical Networking. All rights reserved.
    51. 51. Which Solutions Do We Need to Offer Within This Environment?51 © 2013 ADVA Optical Networking. All rights reserved.
    52. 52. A Call to Action as Performance is Relative52 © 2013 ADVA Optical Networking. All rights reserved.
    53. 53. How Will Our Competitive Landscape Evolve? Further consolidation is likely, ultimately leading to higher industry margins53 © 2013 ADVA Optical Networking. All rights reserved.
    54. 54. Are We Being Recognized For Our Work?54 © 2013 ADVA Optical Networking. All rights reserved.
    55. 55. Are We All Working in a Commoditized Business?55 © 2013 ADVA Optical Networking. All rights reserved.
    56. 56. R&D Spendings Company 2011 Change from As of % of M US$ 2010 Sales Alcatel Lucent 3207.17 -5.22% 16.34% Tellabs 324.10 8.14% 25.20% Infinera 127.12 7.26% 31.39% Ciena 379.86 8.62% 21.80%56 © 2013 ADVA Optical Networking. All rights reserved.
    57. 57. Bandwidth is Growing57 © 2013 ADVA Optical Networking. All rights reserved.
    58. 58. Barriers to EntryComponents Systems58 © 2013 ADVA Optical Networking. All rights reserved.
    59. 59. Gross Margin 2009-2012 60 Gross Margin % 50 40 2009 30 2010 2011 20 2012 10 0 Tellabs Infinera Ciena ADVA ALU Optics59 © 2013 ADVA Optical Networking. All rights reserved.
    60. 60. What Are We Going to Do About This?http://www.google.com/finance 60 © 2013 ADVA Optical Networking. All rights reserved.
    61. 61. Are We in a Position to Brag? Content Cloud high Service Services Providers Profitability Carrier IP Routing medium Relative Component Transport technological low Systems differentiation Transport Systems Up and to the right – we have a lot of work ahead of us61 © 2013 ADVA Optical Networking. All rights reserved.
    62. 62. My Five-Point Plan Mojo New Market Verticals62 © 2013 ADVA Optical Networking. All rights reserved.
    63. 63. … and are we having fun while the pain lasts?63 © 2013 ADVA Optical Networking. All rights reserved.
    64. 64. Are We Having Fun While the Pain Lasts?64 © 2013 ADVA Optical Networking. All rights reserved.
    65. 65. Thank Youbprotiva@advaoptical.comIMPORTANT NOTICEThe content of this presentation is strictly confidential. ADVA Optical Networking is the exclusive owner or licensee of thecontent, material, and information in this presentation. Any reproduction, publication or reprint, in whole or in part, is strictlyprohibited.The information in this presentation may not be accurate, complete or up to date, and is provided without warranties orrepresentations of any kind, either express or implied. ADVA Optical Networking shall not be responsible for and disclaims anyliability for any loss or damages, including without limitation, direct, indirect, incidental, consequential and special damages,alleged to have been caused by or in connection with using and/or relying on the information contained in this presentation.Copyright © for the entire content of this presentation: ADVA Optical Networking.

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