Infinera - Cloud Xpress research

Infinera is set to announce earnings after the close of market on Tuesday. My research has shown that Cloud Xpress deployments is likely to be a contributing factor into tomorrow’s earnings.

As a refresher, Cloud Xpress was specifically designed for ICPs (internet content providers), i.e. those companies that just reported stellar earnings last week - Microsoft, Amazon and Google - with a fair share of those earnings due to a booming cloud business.

Below is the quick evidence showing where these pieces of information intersect. Read further if you care to hear more on the research digging.…

Internet Content Providers (ICPs), such as Amazon, Facebook, Google, Microsoft and others, are building ever-larger cloud infrastructures to deliver their innovative services. To enhance their users’ Quality of Experience with lower latency and consistent service, they are extending the cloud closer to users, building new datacenters across major metro areas, and interconnecting them to create Metro Cloud networks. Several of the top ICP’s are relying on Infinera’s Cloud Xpress platform, with hyper-scale density, low power consumption and a simple deployment and operations model, to build their Metro Clouds.

If I still have your attention after reading the summary above, the link to the actual white paper for the summary is located below along with some highlights and commentary:…


A growing number of Infinera’s customers are leading ICPs responsible for search, storage, email, social media, communications, network applications and a number of other Cloudbased services. Common attributes of this customer base include:
• Strong and sustained growth in bandwidth demand
• Predominantly greenfield network deployment
• High concern for user experience, driving even greater bandwidth

Without the baggage of legacy networks and services, today’s Internet content providers (ICPs) are free to build and adapt their infrastructures for optimal business advantage and rapid delivery of innovative services. Connecting multiple datacenters into a Metro Cloud, a rapidly growing priority for ICPs, requires solutions that offer flexibility, reach and scalability, and Infinera’s high density, Cloud-optimized Cloud Xpress is proving to be an ideal solution.

The Growing Wave of ICPs

Telecom Operators—such as AT&T, BT or Comcast—have long delivered broadband Internet access, creating a massive market for over-the-top entertainment and business services. By contrast, ICPs are companies that focus on the distribution and delivery of Internet content, including blogs, news, music, movies and data.

Well-known ICPs include household names such as Amazon, Facebook, Google, Microsoft, Apple and Netflix.

For such high profile companies, it is essential to deliver a first class user quality of experience (QoE) and, especially for business services, reliability is paramount. To achieve this, major ICPs have built their business models around the Cloud to ensure reliability, performance and scalability. This has led to a massive investment in giant datacenters in remote green field sites. They have linked these datacenters together and to their users around the world with global networks of dark fiber and dedicated data transport equipment, allowing them to control performance and costs. ICPs have also developed a range of other competencies critical to supporting their business, including global capacity, security and compliance services and operational systems and tools to simplify their own operations and enhance their customers’ experience. Read: ICPs have their own bandwidth provisioning software and thus have no need for Ciena’s BluePlanet

The Metro Cloud Phenomenon

The giant datacenters in remote locations have made the headlines, but are only part of the story, because QoE also entails moving the Cloud closer to the user.

Companies like Apple and Microsoft initially pushed software updates from central locations, and some even utilized third party content delivery networks (CDNs), which proved reliable, but costly. Today, ICPs have shifted their focus towards building a global network of datacenters that are better able to ensure fast downloads, a great user experience and consistent services across every continent. This has led to the creation of a small but very fast growing Metro Cloud market linking multiple datacenters, sometimes across great distances but more typically across metro areas or even just down the street. This growth has been driven from two sides: both by this need to bring the Cloud closer to business districts, but also by enterprises with existing facilities wanting the flexibility, performance and redundancy benefits of linking them together.

Unlike those massive greenfield datacenters, Metro Cloud operations are typically constrained by higher energy and real estate costs, so ICPs have been caught between the demand for massive bandwidth and pressures to minimize power consumption and rack space. Cloud Xpress—the High Density, Low Power Demand Solution To address this market demand, Infinera developed a new appliance using feedback from several ICPs.

As well as offering significant density improvements while dramatically reducing power consumption, Cloud Xpress has been specifically designed for Cloud datacenters that use an operational model different from that of traditional service provider sites. Cloud Xpress is designed with a rack-and-stack form factor and a new software approach that allow it to plug into existing Cloud provisioning systems using open software defined networking (SDN) application program interfaces.

By offering an experience similar to the server and storage infrastructure currently deployed in the Cloud, Cloud Xpress enables smooth integration into existing operational processes— enabling Infinera’s many ICP customers to scale quickly, reduce human errors and lower operational costs.

The Cloud Xpress Pay-off

In this highly competitive market ICPs are investing heavily in Metro Cloud solutions, while keeping their cards close to their chest. Top ICPs are relying on Cloud Xpress for its hyper-scale density, low power consumption and Cloud optimized interface.

ICPs are keeping their cards close to their chest - meaning they aren’t showing their hand on their build out plans or which vendors they are using. We don’t know officially which ICPs are Infinera’s customers, although it was disclosed at an industry conference 2-3 months ago that both Microsoft and Google are customers.

Finally, In last quarter’s CC Tom Fallon commented on how buyers of the Cloud Xpress product were waiting for 100 GbE to make their purchases. About 2 weeks later, Infinera announced completion of the 100GbE version. From a blog post at the time of the announcement:

Some observers asked us, “Does the market really need 100 GbE yet, or is this going to be a niche product for a while?”
Our answer is clear: The time for 100 GbE is now and we plan to sell a lot of it.

My take is Ciena is going after the Tier 1s/telecoms while Infinera is aggressively going after the ICPs. Market research shows the ICPs will outpace the Tier 1 spend dollars in 2 years time or sooner.



Excellent data, I will probably add before earnings.

Juniper reported good earnings, which bodes well for INFN.

Juniper’s fiscal 3Q15 financial highlights
For fiscal 3Q15, Juniper’s revenue rose 11% YoY (year-over-year) to $1.25 billion, higher than the consensus estimate of $1.23 billion. The company’s EPS (earnings per share) rose from $0.23 in fiscal 3Q14 to $0.51 in fiscal 3Q15, below the consensus estimate of $0.53. The rise in EPS was driven by 91% YoY growth in net income to $197.7 million.

After the earnings release, Juniper shares rose 6% to open at $31.44 on October 23, 2015.