Earlier this year, I gave one of the biggest keynotes of my career at OFC/NFOEC. The focus was whether or not the optical networking industry has lost its mojo. At the time, I didn't realize how many conversations this topic would start. Since then, thousands of people have watched the video of my keynote and reviewed the supporting slides. What's more, people continue to start discussions with me on this topic.
Looking back on my keynote, I still firmly believe in my assertions. With a few exceptions (my company being one of them), the industry has experienced over 10 years of negative profitability and questionable performance. A fact that's difficult to believe when you consider how much innovation has been driven into the network. Consider your networking demands today compared to a few years ago. The demand for data wherever we are and on any device has forever changed the industry.
The critical question is whether this dramatic shift in data demand is going to change the balance sheets of infrastructure companies or whether it's going to lead to something far more extreme. Could we be about to enter a period of mergers and acquisitions? Taking a quick look at the headlines from the past few months, there's already talk of some companies being sold and others being spun out. The disengagement of Siemens in NSN and the birth of Coriant are recent examples.
Whatever happens over the next few months, there's no denying that the network itself is in a period of ascendency. Our dependence upon it, both from a professional and personal standpoint, has never been greater. Not only do we need increased access to bandwidth, but we also need more robust access. Customers, regardless of their make-up, will no longer tolerate poor service, or rather, poor connectivity. It's all about access, speed, latency and security. These are the pillars of connectivity for today's users.
And this is where the challenge comes. Although customer expectations are greater, their willingness to spend more isn't; at least not significantly. As such, it's not just the infrastructure players that have struggled with profitability over the past decade but also the carriers. Budgets are tighter than ever before. Not a great situation when you consider the necessary infrastructure rollouts that need to happen to support the fierce bandwidth growth.
Ultimately, carriers need to redevelop their networks. They need programmable, application-aware infrastructures that can rapidly respond to changing business demands. One need only look at the enormous amount of work taking place with software-defined networking (SDN) to see the real industry need for such programmable networks. The competition here is fierce. Search Twitter for discussions on SDN and within seconds you'll see thousands of results.
The key question for me is how do we move forward? What steps does the industry need to take to drive profitability?
Here are a few thoughts:
1) Develop SDN. Moving beyond just hardware.
2) Further integrate multi-layer network elements. The value proposition is tremendous and needs to be explored.
3) Differentiate and innovate. Consider how rich our toolbox is. We have lots of technologies but are we fully developing them?
4) Enable companies to build next-generation networks at a fraction of the cost of existing networks in order to build market share.
5) Consolidate. We need to start consolidating the players in the transport layer. We cannot maintain the velocity that we see in our industry today and pursue the first four strategic thoughts.
It's incredible to consider the opportunities that lay ahead, but if we're to see a real positive change in the industry, we need to start moving quickly. There's more than just our mojo at stake.