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Ciena: The Need for Speed

July 15, 2014

Innovation, customer service keep Ciena at crest of network industry

He did not want to become a factory worker. Or a coal miner. In fact, Gary Smith did not fancy any of the jobs available around his home city of Birmingham, England.

The son of a seamstress and an auto machinist, Smith left school at 15 with no distinct idea about what he would do in his career. He set out to find a position that suited him—one that led him to heading up one of the top telecom companies in the world, an enterprise that as of today expects second-quarter revenue upwards of $490 million.

 

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“In my early 20s, I was hired by a telephone equipment company to sell internal phone systems and fax machines door to door around office parks,” Smith says in a recent New York Times interview. “After a few months, I became one of the top salespeople in the company.”

His unique trajectory, from the emerging days of phone service to the apex of growth at Ciena Corporation, has given Smith and his team an edge over the competition. “The way we engage with the customers, it’s really all about a very high degree of customer intimacy and understanding,” Smith says. “We’re able to bring a lot of unique value and insights into their business challenges as well as their network challenges, and I think that’s separating us, frankly, away from the competition, who are trying to be all things to all people.”

Market analyst firm Heavy Reading, in an independent survey, ranked Ciena No. 1 over its primary rivals in the telecom field, besting much larger industry generalists Cisco, Alcatel-Lucent and Huawei by a 2-1 margin. Ciena also has posted a record first-quarter performance and is predicting Q2 revenues of $465-$495 million.

“Our strong first-quarter performance (in 2013) reflects a solid start to our fiscal year,” Smith says in a written statement to investors. “We have positioned Ciena to take advantage of the underlying market dynamics, which are increasingly aligned with our strategy and competitive strengths. We believe the combination of our technology and market share leadership as well as our strategic customer relationships will enable us to continue growing faster than the market.”

Ciena (www.ciena.com) has come a long way since its startup days, when Spencer Trask spearheaded its first round of financing. By 1997, the company went public and brought Smith onboard, with the singular goal of further developing fiber optics to enable carriers to scale up their communications networks. Now it’s one of the top firms providing ever-increasing speed and security around network bandwidth that once was only imagined, creating scalable and programmable network architecture that handles rapid data delivery for more than 1,000 high-performance customers.

But Smith weathered some tough transitions to keep Ciena on track, and the company has outlasted many of its competitors from the early tech boom. “I was named CEO in 2001, the same year the telecom bubble burst, and our annual revenue plummeted,” says Smith. “In my first 12 months on the job, our revenue went from $1.6 billion to $361 million. It was baptism by fire.

“We resisted pressure to drastically cut back the company. It was a contrarian approach,” Smith says of the drive to growth in the midst of market collapse. “We pushed ahead to develop and invest in the optical switching technology to allow movement of large amounts of data at high speeds.”

 

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Even Smith couldn’t have predicted what would become a $1.7 trillion-dollar industry—or what global issues could be solved in a world connected by high-speed optical fiber.

Renowned futurist Jim Carroll, who has consulted for NASA and hundreds of future-focused global industries, says exponential network speed is inevitable. “Science is accelerating to a huge degree because of the very connectivity the Internet provides,” he says.

Carroll cites agriculture as one of the major market needs that expanded technology and Internet connectivity will meet, bringing about the revolutionary ability to feed and sustain the planet’s more than 900 million hungry. “We’ll have robotic tractors automatically seeding the fields, and drones that will fly low over the crops to spot weeds—which will then summon a robotic device to that spot to kill the weed.”

Ciena’s Smith acknowledges the power of connectivity as a profound influence on society, one that’s changed so many lives and made the once-impossible a reality. “Ciena pioneered the ability to create virtual fiber. Without that, (the Digital Age) wouldn’t have happened, so I can’t think of an industry that has had a greater impact on people’s lives around the globe than the kind of things that we’re doing.”

But as world-changing innovations and the proprietary data required to create them become a progressively more vulnerable target, leaders in both business and government are putting crucial focus on network security, especially in light of recent alleged hacking scandals out of China and Southeastern Europe. Smith, a member of the National Security Telecommunications Advisory Committee, advised President Barack Obama as he addressed the issue of cyber security in his State of the Union address in January, calling for Congress to act as well, “by passing legislation to give our government a greater capacity to secure our networks and deter attacks.” Obama followed that with a February Executive Order “to strengthen the cyber security of critical infrastructure by increasing information sharing.”

According to Ed Amoroso, AT&T’s chief security officer, the size of network attacks has become unmanageable even for large businesses. Amoroso, in a recent interview, warns against denial of service assaults. “Large global network providers can help enterprises protect their ability to continue to do business, even in the event of such attacks,” he says. Network experts such as Ciena have essential security roles, ensuring that customers feel their networks are protected.

“Yes, it’s about technology and all of those things, yes,” says Smith. “But it’s really around the values of the people, essentially around trust. We’ve built that up over many years with many customers.”

Ciena’s other major industry advantage, according to its top clients, is success over distance. Ian Harris, system integrators leader for Ciena, says the company’s technology is crucial to the success of the cloud because it provides a huge capacity for storage from great distance, at rates of transmission that don’t disappoint.

“You see Big Data everywhere. Well, big data requires big bandwidth, and boy, can we provide it,” Harris says. “In addition to that capacity and those large volumes of data, distance becomes ever more important. And we at Ciena—with our ultra-high capacity optical transport infrastructure, our coherent technology in particular—are really best placed to marry those two demands of distance and large data, really dissolve distance … to give customers a choice where they put those available IT workloads. “

CenturyLink, Inc., recently announced that it contracted with Ciena to upgrade a network that reaches 50 different metro areas across the nation. CenturyLink, the U.S.’s third-largest telecommunications firm, will deploy some of Ciena’s most cutting-edge equipment—the 6500 Packet-Optical Platform—placing it in rank among AT&T, Sprint, Comcast, Verizon and more.

CenturyLink Senior Vice President Pieter Poll emphasized speed as a key reason for the contract. “Ciena’s … optical technology allows us to provide speed and capacity improvements to our international and domestic regional networks, creating a true, end-to-end 100G network to deliver today’s bandwidth-intensive services and applications.”

“Ciena’s driving a lot of the changes that you’re seeing in the marketplace today,” Smith says. “When you look at some of the things that have happened over the last few years, we’re responsible for the technologies that really facilitated the whole of the Internet.”

 

By DAN GAINOR

 

Spencer Trask principals and affiliates were initial or early investors in Ciena Corporation.

"Ciena pioneered the ability to create virtual fiber. Without that, (the Digital Age) wouldn’t have happened..
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– Gary Smith , CEO, Ciena Corporation