Ciena CEO: We’re not just about service providers

Enterprise data center and cloud connectivity booming, Ciena CEO Gary Smith says

gary smith cienna ceo

For more than 15 years, Gary Smith has been at the helm of Ciena, leading the company through the so-called ‘telecom nuclear winter’ following the early 2000s dot-com bust to its global leadership position today in the optical networking and metro Ethernet markets. In this installment of the IDG CEO Interview Series, Smith talked with Chief Content Officer John Gallant about Ciena’s expanding enterprise business, including its data center connectivity strategy. He also discussed how Ciena is reshaping the portfolio of WAN services for enterprise customers – from the explosion of Ethernet services, to on-demand links and, ultimately, the software-defined WAN. Smith also explored the back-office work and revenue challenges ahead for service providers as big IT shops push for a more dynamic WAN.

You operate in both the service provider and enterprise markets, but let’s focus first on the enterprise space. What do IT leaders need to know about how Ciena makes the world a better place for them?

In simple terms, we virtualize capacity, particularly [for] fiber. We’ve been at the forefront of scaling networks in the broadest sense so that we can deliver to the enterprise, mobile backhaul and the consumer space enormous amounts of capacity that we’ve had to scale over the last 15 to 20 years. We provide the intelligence and software automation as well as the optical technology to deliver that.

Some time ago you changed your tagline to ‘The Network Specialist.’ What does that mean?

We provide infrastructure to the major carriers around the world, as well as content providers and for connecting data centers. That talks about our specialist knowledge around providing that networking and software automation as opposed to many of our competitors. The concept of end-to-end architectures came out in the late ’90s, early 2000s with companies like Lucent, Alcatel, Marconi, Nortel, etc. We were one of the first focused players - us and Juniper - who said we’re going to be best of breed in what we do. We think the world is going to get even more competitive and people need to optimize around best-of-breed technology. That has largely proven to be the case.

MORE: Ciena’s take on differences between virtual, augmented and mixed reality

Some readers may still have an image of Ciena as the high-flying maker of optical networking equipment that took a real hit along with a lot of companies back in the early 2000s. Since then you’ve made a number of acquisitions and a great deal has happened. Give readers a sense of the breadth of the product line and the different networking challenges you help people with.

We recovered from the telecom nuclear winter, as you say, in 2001. The bet that we placed was that there would be enormous amounts of capacity required in all different forms. Basically, we are the best in the world at providing scalable infrastructure capacity and that’s really where we are focused. That then broadened out into providing intelligent capacity, not just enormous amounts of capacity. In some of the links right now we’re providing over 1TB of capacity down a single piece of fiber. It’s now also about providing intelligence on that and being able to switch that capacity around depending on the demands of the customer. We’re very focused on facilitating the on-demand world. When you think about things like cloud computing, virtualization of storage, virtualization of compute, etc., the next frontier to really enable that is the network. We’re at the forefront of delivering that for all kinds of customers, including enterprise.

One of the bigger deals along the way was your acquisition of Nortel’s optical switching group. How did that change the direction you had been going in?

I would say that was a bet-the-farm kind of deal. It was a company that was larger than us. What it did was to establish global scale. It gave us a lot of reach into Asia-Pacific, Latin America, etc. and consolidated our position. We are number one or two in the world in every single market that we play in, either described as a geography or a vertical market segment like data center interconnect, subsea cables, etc.

How much of Ciena’s business today is service provider versus enterprise?

Our service provider infrastructure business is about 70 percent of our business. The fastest growing part of our business is actually non-core telco infrastructure. That’s sales directly into enterprises, data center connectivity, private optical networks, research and education markets, as well as the internet content providers, the likes of Google and Facebook, etc.

In your marketing, you talk about Ciena working with governments, healthcare and financial companies, content providers, media companies. What are the key things you can help those enterprises do that, for example, a traditional enterprise network company like a Cisco is not as well positioned to do? What critical issues are you helping enterprises with today?

Basically, it’s connectivity of data centers in a very efficient way, enabling very scalable capacity between data centers and also service providers. We can do that directly or through partners if some of them are service providers as well, where we help deliver managed services directly into the enterprise. We’re doing things like deploying private optical networks to really improve access to web-based resources. In healthcare, they’re looking to private enterprise networks using packet optical technology to improve connectivity among physicians and researchers, and things like advanced medical imaging. All these applications are just so bandwidth hungry and what we’re able to do is provide economic, scalable bandwidth in a way that they can manage and digest.

Other networking providers offer optical capabilities as well. Why are you better positioned to do that than Cisco or Hewlett Packard Enterprise or somebody else?

Because, essentially, this is all we do. We’re best in the world at it, we have the largest market share, we have the leading technology in that space, we get up in the morning and just think about that and how we can continue to be the best in the world at it. It’s solving the problem that is increasingly top of mind for a lot of enterprises. How do they leverage this wonderful opportunity of virtualized storage and compute? It’s now all about the network and how do you provide scalable network capacity to take advantage of those kinds of applications.

Enterprises are moving many more workloads and a lot more of their data to the cloud. What are you doing with service providers or directly with enterprises that is helping companies with that major cloud transition?

The challenge with the cloud is how enterprises structure the communication part of it. They need help in terms of integrating the applications and scaling that up. There are a lot of companies addressing that, people like, etc. Then the issue quickly becomes: how do I get access to it? What we’re able to do is to come in either with a managed service partner or directly and help them figure out the right kind of network architecture, the right kind of technology to use and how to get a very efficient use of the cloud. Essentially, if you think about virtualization and what it’s done for compute and storage, we’re now doing that to the network.

What new capabilities are you helping service providers bring to market now?

Essentially, on-demand services because people are requiring the network on an on-demand basis. Gone are the days where you’d wait months and months to get a circuit between sites. People want that almost instantaneously and we’re helping to provide things like Ethernet business services on demand - very low-cost, scalable, highly economic services. We’re helping people like Comcast and AT&T deliver those services into the enterprise. Also, things like encryption on the fiber as well so there’s a security aspect to it.

Can you talk about what you’re seeing in terms of the evolution of those Ethernet services in the marketplace?

It’s taken a long time for enterprises to be able to have these kinds of services and move away from some of the more expensive T-1 type circuits. Ethernet business services are a very low-cost technology that really give you much more scalable access into these network ramps onto the cloud, if you will. We’re seeing that both in North America and that’s beginning now to scale up in other parts of the world. We’re the number one provider of that kind of technology in the world.

Are there obstacles that are keeping these Ethernet services from taking off and do you expect them to be resolved soon?

It’s taken longer than we thought, but one of the drivers of this is the rollout of 4G and eventually 5G mobile services. A lot of carriers are now building very efficient next-generation networks that have converged access points where, from a single point, they’re delivering things like fiber to the home or fiber directly into the enterprise, their mobile backhaul. It’s all coming from a single type node. We used to have to provide different networks for each service into the enterprise. What they’re now able to do from a single node is provide multiple different services directly into the enterprise. Mobile backhaul has been a big part of the economics of them being able to do that. Once they do that they can then drop Ethernet business services way more economically into the enterprise off the back of it.

Oftentimes this is couched as a battle between Ethernet services and MPLS. Is that a true characterization of what’s happening? Does MPLS go away over time?

I don’t think MPLS goes away. Expensive IP routing - in terms of everybody has to have expensive edge routers - I think will go away because of economics and they will get virtualized. Ethernet connectivity is a very low-cost way of connecting and so it’s not really either Ethernet or MPLS. It’s more what are you putting over the Ethernet connectivity? Clearly it will continue to be IP but the impact onto IP of virtualization is going to be much more pronounced.

I wanted to talk to you about Ciena’s role in driving the evolution of what’s being called the software-defined wide area network. What are you doing to bring that kind of intelligence to the network?

We’re leading the thinking from a network architecture point of view with our Blue Planet technology, which enables carriers to provide virtualized services directly to the enterprise. This is still a nascent market. There is obviously an enormous amount of publicity about it, but we’re still at the early stages of it. It’s not an easy thing for the major carriers to do, mainly because of the back office. The IT systems to support that are not currently in place. It’s back to the conversation we were having about on-demand. The enterprise ideally wants to have on-demand services that are virtualized and they just want them when they want them. They just want to pay for what they use. That is the promise of things like SDN and NFV.

We’re beginning to overcome some of the challenges with it. The principal challenge is really orchestration. How do you [enable] a carrier to deliver that to the enterprise? That’s what Ciena Blue Planet is solving. We’re very active with a number of carriers around the world rolling out these kinds of services. I would caution that we’re still at the early stages of that and there’s no carrier right now that’s rolling them out on a wholesale basis. It’s still very much initial prototype and trial.

Can you explain the Blue Planet initiative and what that means?

It is a next-generation orchestration platform and, in simple terms, it enables carriers and other content providers to basically put a thin layer, for want of a better description, around their back office orchestration and enables a multiplatform, open architecture orchestration. You can then deliver things like NFV, virtualized applications out to enterprises. What it will do is manage multivendor and multiple kinds of services and talk up through the existing back office systems, the BSS and OSS of the global carriers.

Is this an open initiative that you’re encouraging other companies to work on?

Yes. This is really where the market is going. It’s moving away from being locked into closed architectures of back offices to being an open architecture but that’s the good news. The challenge is it requires an ecosystem to be formed and to mature, in terms of the folks that are writing applications to deliver to enterprises, things like WAN optimization, etc. It requires all those folks to work together to basically enable that delivery. That is why it’s taken so long to get from the concept of this into a widespread reality. Progress is being made on it and it is an open architecture.

Is it similar to the Intercloud initiative that Cisco announced a couple years ago aimed at bridging cloud offerings across multiple service providers?

It is different in that it is truly an open architecture and ecosystem. It’s got micro-service type software where multiple different people can write software for it. There are a number of vendors. It doesn’t have to be us. It can be the carriers themselves. It could even be the enterprise that can actually write that software depending on what it is they want to do.

Which companies do you consider to be your core competitors?

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