Cisco Captures #1 Spot in Packet Optical Transport Segment for Q1/11: ACG Research Optical Networking Market Share Report

The Worldwide Packet Optical Transport Market has seen typical 1Q seasonality, declining 16.1% sequentially but growing 21.0% year over year, according to ACG Research. The total Worldwide Optical Networking market declined 18.1% sequentially but grew 3.7% year over year in Q1 2011.

Cisco has regained the number one position with 19.9% of total market share in Packet Optical Transport, bumping Alcatel-Lucent down to the #2 spot. In an interesting market shift, Fujitsu has jumped to the third spot, because of strong North American shipments. The optical market continues to recover from the recession; however we expect delays in 100G deployments as vendors struggle to bring product to market. This bodes well for Ciena, which already has 100G product shipping, and Cisco as most operators are looking for a second source, and the options for those positions are still wide open.

ACG is optimistic about the future outlook of the Packet Transport market. We see service providers and content providers spending on their backbone networks as well as making significant architectural plans to change their metropolitan networks. Vendors that execute on their packet transport strategy stand to gain significant market share in this segment.

Top Vendors- Worldwide Packet Optical Transport Systems (POTS) Market
Vendor	1Q11
	Rank	Q-Q Revenue Growth	Y-Y Revenue Growth
Cisco	1	-8.8%	21.6%
Alcatel-Lucent	2	-47.3%	92.5%
Fujitsu	3	48.9%	65.0%
Tellabs	4	-15.5%	-15.3%
Ciena	5	1.6%	314.5%
Total		-16.7%	21.0%

QUARTERLY TREND and DRIVER HIGHLIGHTS

• The packet transport market is wide open to router vendors with optical platforms if they can deliver on 100G and ROADM technologies.
• OTN architecture is clearly resonating with operators, but adoption of OTN standalone platforms within major carriers involves a long selling and new certification cycle.
• MPLS-TP, a source of contention in the standards bodies, is seeing slow adoption outside of specific networks in China and Europe. The rapid deployment of Ethernet technologies may, in fact, eclipse or delay MPLS-TP solutions.

For more information contact Karen Grenier, kgrenier@acgresearch.net.

Juniper Recovers #2 Spot from Alcatel-Lucent in Q1/11 Service Provider Routing & Switching Market Share Report: ACG Research

The Worldwide Carrier Routing & Switching markets have seen typical 1Q seasonality, declining 14.2% sequentially but growing 9.0% year over year, according to ACG Research. The Total Worldwide Carrier Routing & Switching market grew revenue $2.7B in Q1/11. Core Routing revenues were down 11.2% q/q and up 9.5% y/y. Edge Routing & Switching revenues down 15.1% q/q and up 8.9% y/y.

Cisco continues to hold the number one position with 50.3% of total market share. In a dramatic market shift, Juniper reclaimed its number two spot, bumping Alcatel-Lucent to number three. According to Ray Mota, managing partner, “this seasonal decline was expected, especially after the strong growth posted in Q4.” ACG is cautiously optimistic about the future outlook of the market. “We see service providers spending on cloud computing and video services and managed services will help drive growth in the remainder of 2011. Vendors that execute on their strategy stand to gain good market share of CapEx spend associated with those services.”

Top Vendors: Worldwide Carrier Routing & Switching
Vendor	1Q11
	Rank	Q-Q MS Point +/-
Cisco	1	1.9
Juniper	2	(2.3)
Alcatel-Lucent	3	(4.0)
Tellabs	4	0.3
Ericsson	5	(0.1)

QUARTERLY TREND and DRIVER HIGHLIGHTS

• Carriers are reducing their CapEx this quarter but still spending in mobility and new services creation opportunities.
• Many providers have exhausted or will soon exhaust their IP addresses. Service providers have to decide about IPV6 now and gradually increase their costs or continue to employ band aid solutions to NAP and risk their business continuity.
• Security is the number one concern of enterprises as they continue to move toward virtualization and cloud offerings.
• Carriers are looking to Carrier Ethernet, QoS, CDN, IPV6, and end-to-end technologies to address their pain points associated with the increasing amount of video traffic.

ACG focuses on providing market analysis and consulting to help service providers and vendors monetize their existing infrastructures and increase operational efficiency and profitability. ACG is uniquely qualified to develop the TCO analysis and white paper. ACG applies multi-disciplinary expertise and multidimensional solutions to complex business and technology issues, delivering greater strategic value than a one-dimensional firm. Each consulting engagement is uniquely structured — no forced methodologies or canned reports are employed. Our consultants’ collective experience is derived from leading firms across a broad spectrum of professional disciplines including management consulting, engineering, marketing, financial analysis, and IT management and operations. We combine advanced academic degrees with practical business experience.

ACG has extensive experience assisting vendors and service providers define and execute their marketing programs from determining their value proposition, positioning and messaging; to prioritizing marketing programs; to supporting execution by designing seminar series and developing and delivering compelling content such as keynote presentations, sales and analyst presentations, white papers, videos and articles.

Our strong relationships with vendor market leaders and innovative start-ups, enables ACG to offer extensive knowledge of product portfolios and strategies as well as emerging architectural shifts. We have a strong track record of predicting market trends and separating hype from practical reality.

Karen Grenier, Marketing and Communications
kgrenier@acgresearch.net
Desk: +1 408-200-0967

Huawei Conference 2011: An ACG Report

Eve Griliches and approximately 200 financial analysts, industry analysts and media attended the 2011 Huawei Analyst conference in Shanghai and Beijing last week.

In 2010 Huawei forecasted 20% growth for 2011. Actual growth was 24.2%, $28 billion, and the company’s operating profit increased 15.8% to $4.4 billion. Cash flow was $4.3 billion with a CAGR of 49% over 5 years. Huawei estimates that the company will end 2011 at $31 billion for the year. Huawei attributed the increased revenues to its 1) consolidation of leadership teams, which increased efficiencies and focus, and 2) expansion into and penetration of the enterprise and device businesses. Highlights for 2010: enterprise segment came in at $2 billion, and Huawei initiated 47 major managed services contracts and created a cyber security center in the UK.

This report covers some general highlights, which are in the annual report, some key trends, internal challenges as well as Huawei’s overall strategy for several product lines. It also discusses some product line issues. To read more, go to ACG Research's our store or contact sales@acgresearch.net.

Eve Griliches

egriliches@acgresearch.net
www.acgresearch.net

ACG Research Cites Top 7 Cloud Providers

Cloud computing is hot, and the race is on for cloud providers to position themselves in the market. All of this growth is positive. However, although there are many companies offering cloud computing services, only a few have the levels of cloud architecture, technology and services that efficiently and cost effectively help enterprises of all sizes move into the cloud. To help sort it out, ACG Research's cloud analyst Jerome Oriel has identified the top seven cloud service providers (not in order of preference) that have the right combination of cloud computing services elements and cites strengths and weaknesses depending on their cloud strategy. Click here to read Jerome's SearchTelecom.com article on the top seven.

Jerome Oriel
joriel@acgresearch.net
www.acgresearch.net

Why Virtualized Data Center Security? The $36 Million Dollar Answer

In my previous column Data Center Security: Only as Strong or Safe as the Weakest Link I discussed the seriousness of security in relation to data centers. Yesterday’s news emphasizes that security is serious business: A 26 year-old computer hacker pleaded guilty on Thursday to stealing hundreds of thousands of credit card numbers, causing losses of more than $36 million. Rogelio Hackett, of Lithonia, Georgia, stole 675,000 credit card numbers by hacking into business computer networks, downloading credit card databases or purchasing them on the Internet. He also admitted that he sold credit card information and counterfeit cards to acquire gift cards and merchandise.

This breach is not unusual; although the amount of data lost to cyber attacks dropped significantly in 2010, even as the number of breaches jumped, confirmed cases of compromised data in 2010 rose to 761 from 141 in 2009.[1] And with the proliferation of new data and end-user packaged services such as managed security, compliance and cloud, SPs are under increased pressure to ensure that their data centers have network architecture, systems and robust policies in place to guard against hacking and malware. With network services delivered by multiple data centers and application servers (or more frequently by third parties with applications hosted in remote data centers across the Internet), each layer within the data center must have security protocols that guard against potential breaches.

One safeguard that SPs can employ is system virtualization, which can effectively address and improve data center security. In a virtualized data center LANs, storage area networks, and servers are virtualized so that a single physical network or system element can run multiple logical elements. In a layered security model, security boundaries are controlled so that trusted network components are separated from unreliable components. IT personnel may designate multiple boundaries and multiple layers of protection assigned to systems. By managing network elements and systems within and outside of the boundaries differently managers provide an added level of security. The importance of the system or component and how vulnerable it is determines where it falls within or outside of a boundary and how deeply it will be embedded. Additionally, the layered security architecture is correlated to the virtualization architecture that is implemented in the data center. This is done by mapping virtual networks at layer 2 and layer 3 to virtual storage networks and virtual servers. This model not only improves scalability and reduces OpEx related to energy, but it also improves data center security by isolating components of the network and system infrastructure and mapping the virtualization and security defenses in the network to the virtualization models deployed across the entire data center.

Securing data centers is not simple and requires stringent security design at every layer, which must complement the logical design and systems requirements in the data center. SPs must be able to quickly identify and respond to evolving threats, protect their critical assets, and enforce their business policies. Not having these requirements in place could end up costing a service provider millions, $36 million to be exact.

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[1] Data Breach Investigations Report

Ray Mota
rmota@acgresearch.net
www.acgresearch.net

Ethernet QoS: Trust, But Always Verify

Unlike legacy Frame Relay and later ATM, Ethernet initially lacked the quality of service (QoS) guarantees that business customers had grown accustomed to. Not surprisingly, enterprises and even wholesale carrier customers were reluctant to adopt Ethernet services. By creating mechanisms that separate different QoS service levels via virtual LANs: “best-effort”, priority data, and a stringent QoS class, service providers can offer various service level agreements (SLAs) to meet enterprise or wholesale carrier customer requirements. Of course, service providers have to provide consistent Ethernet QoS whether the service is running over their own network or a third-party provider partner. While service providers have more direct control of Ethernet QoS when it runs on their own network, it becomes even more challenging when they have to leverage a third-parties’ facilities to meet a customer’s needs that reside outside their network footprint.

Download this eBook to learn about approaches, challenges and opportunities in achieving consistent Ethernet service QoS. Ethernet QoS: Trust, But Always Verify - FierceTelecom http://www.fiercetelecom.com/offer/offer/ethernet_qos#ixzz1K5P7gQA2

Ray Mota
rmota@acgresearch.net
www.acgresearch.net

Data Center Security: Only as Strong or Safe as the Weakest Link

Although a government shutdown was averted, had it happened, cyber security and providing impregnable networks for the CIA, FBI and other U.S. government agencies with limited staffing and resources could have been severely compromised and had huge consequences and repercussions for these and other departments — not unlike security issues faced by enterprises. Data centers, whether government or enterprise owned, are key targets for criminals trying to hijack, steal or destroy critical and confidential information.

Enterprises and service providers must be able to quickly identify and respond to evolving threats, protect critical assets, and enforce their business policies. They need to understand that when they consider security they cannot only look at it as a point solution but as an end-to-end solution. Why? Because your security system is only as strong or safe as the weakest link in a network or infrastructure and having the appropriate security tools and controls ensures that firewalls and servers are not breached and systems are not at risk.

The security requirements vary somewhat when you consider the differences between enterprises and service providers. Enterprises are very critical about their networks and the importance of their infrastructure in relation to their business initiative. Essentially, they either manage their own network or have a partnership and coordinate their infrastructure/network security with a group of trusted managed service providers.

Service providers, on the other hand, must understand that just as with enterprises, applications are driving their networks. However, the key difference is that service providers are dealing with either hundreds or thousands of unrelated networks that require traffic flow isolation and each necessitate impenetrable security — both potentially costly requirements.

What must enterprises and service providers do to address the goals of (1) maintaining and upgrading the integrity of their network security while simultaneously (2) offering more services and expanding their market and (3) reigning in their OpEx?

To address their market share and retain their competitiveness, service providers must increase their content and applications, which demand more complex infrastructure requirements. Since all service providers are moving to IP because of the flexibility and potential cost saving (driven by convergence), security must be impregnable because IP increases security risk. Additionally, service providers need to maximize the value of each service they deliver either through multiplay or some manage service offering, both of which also have security requirements.

When it comes to service and security, the bottom line is that SPs need to, at a minimum, implement scalable, high-performance, reliable, and inviolable networks; manage multiple remote connections; and monitor and address potential security issues from many sources without degrading the customers’ experience. The challenge becomes one of juggling and balancing security and performance without compromising either.

Ray Mota

rmota@acgresearch.net

www.acgresearch.net

Eve Griliches Presents at OFC 2011

Click to play

Eve Griliches

egriliches@acgresearch.net
www.acgresearch.net