Acacia Communications' $ 2.6 billion acquisition, announced yesterday, looks like a huge amount to pay for a small optical systems company. It is also a strategic change that not only provides a coherent optical interconnection internally, but will likely increase the influence of the network provider on cloud clients and service providers.
Acacia, which is an existing Cisco provider, manufactures high-speed coherent optical interconnection products for web-scale businesses, service providers, and data center operators. Cisco is already using its technology in some of its optical systems and routers. The Maynard, Massachusetts-based company and its employees will join Cisco's optical and optical systems group in the networking and security sector as the acquisition closes at the end of the year.
"Acacia's market for consistent technology is a multi-billion dollar market," said Bill Gartner, senior vice president and general manager, Cisco Optical Systems and Optics Group, in an interview with SDxCentral. "We are a relatively small player in this market, but we believe this extends the possibilities of optical systems."
What is consistent?
Coherent technology, he explained, is what allows you to send optical signals over long distances, for example between two data centers in a city or even a country to the other. "In this environment outside the data center, consistent optical transmission becomes necessary," said Gartner.
Cisco also owns the internal optical network component in the data center. This was done internally during the acquisition of Luxtera in December 2018.
"We can perform a very important signal processing on the optical signal to help it travel very long distances (Acacia plays in this environment) and Luxtera in the data center, in this short-range environment", has he declared.
Acacia technology also addresses a key trend that Cisco sees in this segment, Gartner added. "This technology, traditionally delivered in chassis systems, will end up in plug-in connectors," he said. These plug-in optics increase network capacity while reducing complexity and cost. "They're plugged directly into a router or switch, and we'd like to include it in that router or switch, which opens the door. [total addressable market] in billions for us, "he said.
This technology will also play a fundamental role in Cisco's networking, said Gartner.
"We play a very important role in data center routing and switching," he said. "Our portfolio of intention-based networks is based on fundamental innovations for three fundamental technologies: silicon, software and optics. These three elements come together to build world-class routers and switches as well as intention-based networking products. This is therefore playing into the optical part of this fundamental technology. "
The main suppliers of optics
Jimmy Yu, vice president and industry analyst for the Dell'Oro Group's optical transport program, said Jimmy Yu, plug-in optics is the future of routing and switching technologies.
"In recent years, I have always said that the market for optical systems would come back in the past when the main suppliers were the ones who manufactured their own components," he said. "These companies were Nortel, Lucent, Alcatel and Marconi. All four sold their component business when the optical market collapsed in early 2000.
"As soon as Cisco has finalized this acquisition, four optical system vendors will have internal capabilities to develop and produce the key components of consistent line cards," Yu added. "The four system vendors are Cisco, Ciena, Huawei and Infinera. . "