Folks, here it is. From the source.
Infinera OFC Recap
Investors and Analysts:
The mood was upbeat at the OFC Conference in Anaheim this week as the outlook for optical transport solutions and components is optimistic.
Most importantly for Infinera, reception for our newly announced Infinite Capacity Engine was overwhelmingly positive. Infinera’s technology lead continues to widen as we provide customers with the massive scale, power efficiency, and flexibility they require to deliver next generation networks. The Infinite Capacity Engine will serve as the technology platform from which new products and solutions will be introduced in the near future – stay tuned for more details.
We were happy to have the opportunity for our President and co-Founder, Dave Welch, to share details on our next-gen technology with a packed room of investors and analysts at our Technology Briefing on Tuesday afternoon. For those of you who were not able to attend live, please refer to the “Latest News & Events” section of our IR page (http://investors.infinera.com/) for a recording of the event and to download the presentation.
In addition to announcing the Infinite Capacity Engine, another hot topic was news that Microsoft will be working with Inphi for part of its data center buildout. We believe the downward stock move related to this news is an overreaction. We have publicly stated that we expected that there would be portion of the DCI market which could potentially be served by alternative technologies.
While we can’t name specific customers, it is well known that we sell to most of the large ICPs, each of which have distinct Data Center Interconnect (DCI) applications and operational requirements across their architectures. Today we participate in a majority of these applications but not all. We previously stated there is a portion of the DCI market where we do not really play today – direct pluggable optics on switching and routers transmitted over fiber bundles and short distances. There is lots of fiber available in these short distance applications such as between buildings on a campus or in short metro applications. We believe the Microsoft announcement with Inphi addresses this part of the market.
Broadly speaking, while this application may make sense for portions of some of the larger ICPs’ data center buildouts, we believe the higher operational burden of implementing this solution across the hundreds of smaller more challenging environments will likely not outweigh the cost benefit. Plus, based on our experience qualifying Cloud Xpress, we believe the process of advancing a proof of concept that works in an optimized lab environment to customer qualification under stress, and ultimately operationalizing, will not be quick by any means. Bottom line, our view is that this application will be limited where it can go into the network, and it will be a long road to get it up and running at scale.
Our DCI volume continues to ramp to the ICPs and others as we attack the broad set of applications both in the US and internationally. We will continue to innovate in this area and believe our technologies will lead to ultimate success in the growing DCI market.
We look forward to speaking with you after Q1 Earnings. Thank you for your support of Infinera.