NXTcomm08

Infinera Addresses Capacity and Reach Questions with New Line System

| Jun 10, 2008 | Optical Infrastructure | Show Update

| Analyst: Jason Marcheck

Current Perspective: Positive Vendor Importance: High Market Impact: High

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Event Summary

June 9, 2008 -- Infinera announced that it will introduce the ILS2, its next-generation optical line system, at NXTcomm 2008. The ILS2 is promised to support 25 GHz channel spacing, leading to total system capacity of 1.6 Tbps in 10G operations, while ultimately scaling up to 6.4 Tbps and 8 Tbps of total capacity in 40G and 100G operations, respectively. Infinera also announced that the ILS2 will support Raman amplification modules that will increase total system reach from 800 km to 2,500 km.

Analytical Summary

• Current Perspective: Positive on Infinera’s announcement of its new line system for the DTN platform; dubbed the Infinera Line System 2 (ILS2), it represents an improvement over the vendor’s first-generation line system in almost every aspect. With tighter channel spacing, access to sophisticated amplification modules, and the promise of higher-capacity PICs on the horizon, Infinera should be well positioned to offer its carrier customers a solution that dramatically increases total system capacity, while potentially limiting the need for some equipment in the field. At the same time, a good deal of the ILS2’s ultimate promise is predicated on PIC advancements that are still a year or more from being realized.

• Vendor Importance: High to Infinera, because the move provides another example of Infinera’s drive to systematically refine its DTN platform. While the vendor has achieved notable success in a relatively short period of time, certain technical limitations threatened to constrain the platform’s ultimate appeal, even within the long-haul market where Infinera now touts a number four market share position. This latest series of upgrades addresses many of the DTN’s previous limitations and makes the platform applicable to a wider range of carrier needs.

• Market Impact: High on the optical infrastructure market, because Infinera has quickly become a leading competitor in the long-haul DWDM market. To this end, any enhancements that make the DTN more capable should be viewed as a threat. Still, while enhancements such as the ILS2 and passive PICs, which were detailed in a separate release, figure to make the DTN more appealing, other limitations such as the requirement of pre-provisioning capacity as well as a potentially hardware-intensive upgrade path for the ILS2 still give the competition fodder to question the DTN’s economically-friendly value proposition.

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