Zhone Aims for Access Market Glory with New MXK Platform

| June 17, 2009 | Broadband Infrastructure | Competitive Intelligence Report

| Analyst: Erik Keith

Current Perspective: Positive
Vendor Importance: Very High
Market Impact: Moderate/High

Event Summary

June 16, 2009 – Zhone announced its MXK intelligent Terabit access concentrator line, its newest addition to the company's family of carrier-class multi-service access platform (MSAP) products. The new MXK platforms feature non-blocking capacity of 20 Gbps per slot, supporting up to 3,600 x 100 Mbps GPON subscribers or 360 x 1 Gbps Active Ethernet subscribers per chassis, while leveraging Zhone's well-proven SLMS access operating system for sophisticated service intelligence and ease of management.

Analytical Summary

• Current Perspective: Positive on Zhone’s debut of the MXK solution set, which features some of the highest non-blocking throughput capacities of any fixed access platform on the market (i.e., 400 Gbps backplane/switch fabric and a dedicated 20 Gbps per slot), thereby providing operators with a very compelling option for “future proof” advanced services delivery. The initial MXK portfolio is composed of three discrete chassis: the three RU, seven-line card MXK319; the eight RU, 14-line card MXK819; and the (ANSI-market) 18-line card MXK823, giving operators in all regions a solid array of form factor options.

• Vendor Importance: Very high to Zhone, which needed to replace its aging MALC (MSAP) and Raptor (DSLAM) series, which despite offering strong subscriber port density/scalability metrics, were both hamstrung by comparatively low throughput capacities (e.g., 5 Gbps backplane), which presented rivals with easy marketing volleys directed at Zhone. With the MXK debut, Zhone has not only eliminated a previous portfolio weakness, but also surpassed almost all rival fixed access competitors in terms of the now critically-important throughput metrics, as well as the corollary subscriber port density/scalability capabilities.

• Market Impact: Moderate to high on the global FTTP and MSAP markets, because although Zhone’s new MXK series offers very strong speeds/feeds and advanced service support capabilities, e.g., enabling operators to support the evolving avalanche of bandwidth-intensive content such as HD and unicast TV/video, Zhone remains one of the smaller players in the overall fixed access market, which has seen substantial vendor consolidation over the past four years, with Tier 1 vendors making life difficult for the smaller vendors. However, with the initial MXK release, Zhone has referenced ten customers across multiple global regions that have already deployed the new solution, highlighting both the merits of the new MXK solution set and Zhone’s ability to win new business despite multiple challenges in the marketplace.

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Current Perspective

Competitive Positives and Concerns

Recommended Vendor Actions

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Recommended Competitor Actions

• Rival fixed access vendors can assert that while Zhone’s MXK platform offers compelling speeds/feeds and related feature/service support capabilities, and the company cites over 700 customers worldwide, Zhone has yet to “win big” in the operator market, i.e., by garnering sustained Tier 1 incumbent operator wins, and that as such, the company does not present a strong competitive threat, especially for Tier 1 fixed access vendors.

• Alcatel-Lucent can leverage the Zhone MXK debut as an opportunity to redirect customer and market attention on the strengths of its ISAM series, especially in the areas that Zhone has focused considerable resources on in the development of the MXK solution set. For example, while the MXK supports a compelling 400 Gbps of backplane capacity/throughput, Alcatel-Lucent’s 7342 ISAM has supported 500 Gbps since Q1 2008, a market-leading metric in a true “apples-to-apples” comparison with rival solutions (e.g., those touting “Terabit” solutions).

• Cisco can also leverage the Zhone MXK debut as validation of its active Ethernet FTTH proposition, since the Zhone product features both passive and active fiber connectivity in its initial release. Cisco can point to its more than 4 million subscribers supported worldwide (number one in active Ethernet FTTH globally) thanks primarily to strong customer traction in the European and APAC markets. Cisco has never wavered from its commitment to the active Ethernet approach, and the company’s early bet on this FTTH option has paid off.

• Motorola and other North American-based fixed access rivals such as ADTRAN, Calix, Enablence, Hitachi Telecom, Occam and Tellabs can highlight their respective product, customer and market differentiators against Zhone’s new MXK platform. For example, Motorola can point to its strong position in the North American GPON market, where it was number one during Q1 2009 (according to Infonetics), while Calix can point to its more than 300-strong GPON customer base.

• EMEA-based vendors such as Ericsson, ECI Telecom, Fujitsu, Iskratel, KEYMILE, Nokia Siemens Networks and PacketFront can also point to their own competitive differentiators vis-à-vis Zhone and its new MXK platform. Both Ericsson and ECI can highlight their own backplane/throughput capacities (320 Gbps and 400 Gbps respectively), while PacketFront can point to its highly-scalable Metrostar 2016 platform which supports a staggering 1,024 GPON subs per one RU box (via 1:64 split), scaling to a theoretical ~40,000 per telco rack.

• Huawei, ZTE, ZyXEL and UTStarcom also need to leverage the Zhone MXK announcement as a prime opportunity to engage in their own counter-marketing initiatives. Huawei, in particular, needs to clarify its claims about the MA5680T GPON OLT, which the company touts as supporting 2.5 Terabits of throughput, but upon closer inspection, appears to support a more down-to-earth 92 Gbps/chassis.

Recommended End User / Customer Actions

• Operators, including existing Zhone customers, that are interested in the new MXK platform for delivering FTTH services (active or passive) need to arrange trial deployments of the new system to evaluate its live-network capabilities. Likewise, operators that are interested in the MXK as a solution for copper-based access services (ADSL2+, VDSL2 and EFM) can also arrange trials of the platform configured with copper interfaces.

• Operators interested in Zhone’s new MXK platform need to evaluate it alongside comparable solutions such as Alcatel-Lucent’s 7342 FTTU platform (and 73xx ISAM series for FTTx/DSL deployments), ADTRAN’s TA5000 platform, Calix’s C7, ECI Telecom’s Hi-FOCuS 5 series, Ericsson’s EDA series, Huawei’s MA5600T solution set, Motorola’s AXS series, Occam’s BLC, and ZTE’s c220 and new c300 platforms.

CLIENTS ONLY

Current Perspective

Competitive Positives and Concerns

Recommended Vendor Actions

| Client access - Full report in Broadband Infrastructure | More information

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