Ericsson deciding to buy Telcordia and Amdocs agrees to acquire Bridgewater suggest that vendors are starting to get a clue about the service layer. Level 3 working to become a content delivery networking play suggests that it understands it has to step its game up to remain competitive in the new networking world.
So where does this leave us with Ciena?
Here’s a company that, any way you look at it, is just a bit-pusher. The lower layers of the network can’t be convincingly linked to personalization—they can’t afford to be made aware of users and activities or they won’t scale and contain transport costs. That means that they’re on the road to even deeper commoditization, and that’s problematic.
It’s particularly so for Ciena because they told the Street they planned to increase margins significantly over Street estimates. Sure, they didn’t offer an aggressive or firm timeline, but they’re making a promise that they cannot possibly keep unless they plan to either buy or build their way out of the optical layer. So where would they go? They couldn’t expect to climb up to Ethernet and IP. First of all, there are a million big incumbents there; secondly, that space has its own margin/features problem.
Oh, well. At least they’ll have company from RIM—the classic example of how a company can stick its head in the sand and accomplish nothing, other than perhaps getting infested with ants.
RIM had an absolute lock on business mobility because they had a lock on the handset/appliance space for businesses with BlackBerry. But they dawdled and fiddled and let their edge slip. They watched Apple take market share, and Android come on even stronger in terms of unit volume, and Microsoft and HP try to ignite their own business appliance programs. RIM’s counter? A shortsighted, ineffective, uninteresting tablet, which it gave an insipid launch.
So what do they do to recover? Nothing. It’s too late.