CIENA is a leading global provider of innovative network solutions to telecommunications
service providers and enterprises worldwide. Our customers include long distance
carriers, local exchange carriers, cable operators, Internet service providers,
wireless and wholesale carriers, resellers, governments, large businesses and
non-profit institutions.
Currently, the major challenge service providers face is evolving their networks
to process efficiently and deliver profitably a growing range of data services.
The networks of most ILECs, IXCs and PTTs were designed to carry voice traffic
and to deliver voice services. As the demand for data services grew, these carriers
built separate data networks and operated them concurrently with their existing
voice networks. Revenue from data services continues to grow, but in most cases
not nearly as fast as data traffic.
With data surpassing voice as the dominant network traffic but lagging in terms
of profitability, carriers are looking for more cost-effective and efficient
ways to deliver the range of voice and data services that their customers are
demanding. Most have concluded that the only way to offer advanced voice, data,
video and other services profitably is to consolidate their separate voice and
data networks onto a single converged network, one that is capable of delivering
multiple services over a single infrastructure.
While this vision of eventual network convergence is widely shared, there are
divergent perceptions regarding how it will come about. Some equipment vendors
envision that the converged network will be based on a completely new network
infrastructure. We believe, however, that the transition to a converged all-service
network will be an evolutionary process, one in which carriers will leverage
their existing network investment. The majority of our strategic initiatives,
partnerships and investments are intended to capitalize on this evolution.
CIENA's solutions harness innovation to deliver improved network economics.
Our intelligent networking solutions are designed to enable service providers
to transition from inefficient, legacy, voice-centric networks to more efficient,
data-friendly networks. CIENA's systems and their intelligent networking software
address the network scalability and capital spending challenges and the escalating
operational costs faced by service providers.
CIENA's equipment can replace multiple legacy network elements with fewer,
more intelligent network elements, thereby simplifying the network and lowering
carriers' initial capital costs and ongoing operating expenses.
The software functionality of CIENA's equipment creates a network environment
in which distributed intelligence ' intelligence at the network element level
' takes the place of centralized network intelligence. As a result, CIENA networks
can 'think' for themselves, making dynamic decisions without human intervention
thereby facilitating provisioning and protection capabilities and lowering associated
operating costs.
CIENA's equipment is designed to reduce network operating costs by enabling
carriers to manage network traffic and network bandwidth more efficiently.
CIENA's equipment is designed to enable carriers to shorten the time it takes
to provision services, in some cases from months to nearly real-time, thereby
accelerating revenue generation.
In addition to capital and operational cost savings, CIENA's equipment and
network management software is designed to enable carriers to offer new, revenue-generating
and service-differentiating services.
In addition to those products developed internally or added through acquisition,
CIENA has executed reseller agreements with both Laurel Networks and Luminous
Networks. Under the agreement with Laurel, which is exclusive as to certain
designated customers, CIENA markets, sells and supports Laurel Networks' ST200'
Service Edge Router to service providers worldwide. Under the agreement with
Luminous, CIENA markets, sells and supports Luminous Networks' entire PacketWave'
family of products.
Services
CIENA provides a comprehensive portfolio of service and support offerings for
its products. Our offerings include:
Deployment services including network design, product installation, network
integration testing and acceptance testing;
Maintenance services including parts exchange, engineering dispatch, advanced
technical support and hardware and software warranty extensions; and
Training and documentation services including product training, service partner
training and documentation services.
COMPETITION
Competition in the telecommunications equipment industry is intense, and became
increasingly so as the market for communications networking equipment declined.
CIENA's competition is dominated by a small number of very large, usually multi-national,
vertically integrated companies. Each of which has substantially greater financial,
technical and marketing resources, and greater manufacturing capacity as well
as better established relationships with the incumbent carriers than CIENA.
Included among CIENA's competitors are: Alcatel, Cisco Systems, Inc. ('Cisco'),
Fujitsu Group ('Fujitsu'), Hitachi Ltd. ('Hitachi'), Huawei Technologies Co.
Ltd ('Huawei'), Lucent Technologies Inc. ('Lucent'), Marconi Corporation ('Marconi'),
NEC Corporation ('NEC'), Nortel Networks ('Nortel'), Siemens AG ('Siemens'),
Telefon AB LM Ericsson ('Ericsson'), and Tellabs, Inc. ('Tellabs'). There are
also several smaller, but established companies, such as ADVA AG Optical Networking,
and Sycamore Networks, Inc., that offer one or more products that compete directly
or indirectly with our offerings. In addition, there are a variety of earlier-stage
companies with products targeted at the communications networking market in
some stage of development or deployment, most of them employing advanced technology
that could offer advantages over products offered by CIENA.
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