- Ciena is seeing a lot more of its revenue growth coming from hyperscalers
- Service provider customers are upgrading their networks to deal with AI traffic
- Finally, networking is getting the same respect as compute and storage
OPTICAL FIBER COMMUNICATIONS (OFC), LOS ANGELES — Ciena has its a big presence at the Optical Fiber Communications (OFC) conference in Los Angeles, where this week a couple of the company's executives talked with Fierce about how AI is changing its customer mix.
"Many years ago what dominated OFC was demand from service providers and telco customers," said Mark Bieberich, VP of portfolio marketing at Ciena.
But now, much of the demand for Ciena’s products is coming from hyperscalers and neocloud companies, he said. More specifically, he put the number at around 50% of the business.
This doesn't mean that service providers are near death, though. Ciena SVP and Chief Strategy Officer David Rothenstein said, “The death of the service provider is greatly exaggerated.” These companies still make up nearly 50% of Ciena’s business.
Fierce asked what AI means for service providers, and the Ciena executives said it’s a mixed bag. On one hand they’re seeing increased demand on their networks. But on the other hand, AI presents more opportunities for them to service enterprise customers.
In terms of service provider networks, Rothenstein said, “Their existing infrastructure will not support that traffic growth. Some of them will need to invest more into their networks to stay relevant, or their business models will be broken, otherwise.”
Lumen Technologies is reaping the AI rewards
Rothenstein did note that Lumen Technologies is one service provider that’s capitalizing on the AI boom with its wholesale services, long-haul networks and dark fiber. It’s selling capacity to hyperscalers who need to connect their AI data centers to each other and to the internet backbone.
But AI does provide more opportunities for service providers to help enterprises tap the technology. Ciena co-develops products with service providers, and it’s currently working with them to create fiber optics that provide more capacity, greater density, use less power and cost less.
For example, Ciena is working with Verizon on a suite of solutions and products designed to enable global enterprises to run resource-intensive AI workloads at scale.
Optical networking is finally cool
There has always been a lot of respect among hyperscalers for compute and storage capabilities. Somehow, networking has been the red-headed stepchild. But no more!
“AI has fundamentally changed the calculus. It demands power, chips, compute capacity. But the reality is: none of it matters if all the great work isn’t being connected," Rothenstein said.
Eleven years ago, Ciena’s total revenue from cloud providers was zero. And today it’s over 50% of the company’s business. he added. “We are seeing a shift where the cloud providers are not just the proverbial stars of the show, but they’re the primary drivers of network architecture in a way that it used to be the service providers."