Cisco aims to grow its revenues as well as profit margins in an optical networking sector switching to components with its $2.6 billion offer for Acacia Communications. The deal would put the Ethernet titan in the long-distance marketplace for the first time and assist it to retain enterprise from net giants who are more and more purchasing optical modules straight from component marketplaces.
Acacia sells coherent optics, digital signal processors (DSPs), photonic built-in circuit modules, and transceivers running as much as 600G for large data facilities and telcos, in addition to OEMs similar to Cisco rival Arista Networks. Its new-era modules can be used for distances covering everything from inside a data facility to undersea cables.
“That helps simplify issues for customers who won’t have to consider purpose-constructed components for these [different distance] segments now,” stated Bill Gartner, general supervisor of Cisco’s optical system.
Cisco has an established business in optical modules that it provides for its systems and sells to different OEMs. However, it’s at present “primarily 10–100G — all short-reach — for inside the data facility … so this is a prime-line expansion,” said Gartner, who mentioned that Cisco would be even-handed as a module provider.
The reason that the most crucial data facility operators are increasingly purchasing optical modules straight from element suppliers is to keep away from the high margins followed by switch and router manufacturers. The Acacia offer would assist Cisco to retain that enterprise and give it an edge in lower module prices than its OEM competitors.
Cisco pegs coherent optical networks as a multi-billion-greenback sector, shifting from programs to modules; however, still in an early stage. As the trade shifts “from chassis to pluggable [modules], we need to consider how the network structure will evolve, and we must be able to influence that structure with prospects,” said Gartner.