Infinera (NASDAQ:INFN) defended the pace of its entry into the market for 40-Gb/s networking gear this week. CEO Jagdeep Singh said the company doesn’t want to be the first vendor in the 40G market; it wants to be the best.
In a speech at an investor conference, Singh (who is stepping down as CEO next year) said Infinera expects to deliver photonic integrated circuits to its internal systems developers before the end of this year, which — using history as a guide — should result in commercial system shipments a year or two later: 2010 or 2011. Though Ovum hailed the start of 40G’s general deployment phase late last year, and Nortel Networks has trumpeted a long list of 40G customer wins, Singh pointed out that Nortel was also early to the 10G market that Infinera eventually dominated. And, he argued, the 40G market is still very young.
“People often [tell] us, ‘You guys missed the 40G market.’ Our answer is, ‘There’s no market to miss,” Singh said. “It’s a niche market today.”
Infinera plans to introduce the same disruptive economics to the 40G space that it did to the 10G space. But that will take a bit longer.
In a research note following the speech, Infinera’s host for the event, Jeffries analyst George Notter, called Singh’s argument “somewhat compelling,” but added, “We’re concerned that late entry into the marketplace limits Infinera’s opportunity in 40G.” Notter suspects Infinera’s lack of a 40G-centric product may have contributed to its having lost a recent contract from its most important historical customer, Level 3 Communications, to Huawei Technologies (though none of those companies have confirmed that, and some others, including SNH Capital analyst Natarajan ‘Subu’ Subrahmanyan, think Level 3’s decision was based purely on price).
Meanwhile, Infinera also disclosed that it began shipping its new (but as yet undisclosed) metro access products last month and already has four customers. It plans to debut the new gear at the Supercomm trade show in Chicago next month.
Having also added submarine products to the portfolio this month, Singh said, “We now play in the full range of applications in the DWDM space.”
