How Ciena Keeps The Internet Online, With Ceo Gary Smith

Today, I’m talking pinch Gary Smith, CEO of nan networking institution Ciena. You astir apt aren’t acquainted pinch Ciena — nan institution isn’t really a family name. But each nett personification has relied connected nan company’s products; successful fact, each nett personification has utilized its products. 

Ciena makes nan hardware and package that make nan fibre optic cables that nexus nan world ray up pinch data. That’s everything from conception fibre networks for broadband ISPs to nan monolithic undersea cables that nexus continents. There’s a precocious probability that this very podcast came to you complete a Ciena-powered network, successful truth — this institution is everywhere.

Gary himself is simply a fascinating characteristic successful this story. He joined Ciena successful 1997, nan twelvemonth nan institution had an astonishingly successful IPO successful nan mediate of nan dotcom boom. And he became its CEO successful 2001, correct aft nan dotcom clang sent nan company’s banal worth — and nan remainder of nan strategy — into a tailspin. So Gary has had a front-row spot to nan betterment of nan nett arsenic we cognize it, and Ciena has been location each measurement of nan measurement — arsenic telecoms and undersea cables first brought nan outer online, each nan measurement to nan emergence of unreality computing and, now, generative AI. 

You’re going to comprehend Gary and I talk a batch astir point called WDM, aliases Wavelength Division Multiplexing, which is nan basal method invention Ciena is built around. WDM is perfectly cardinal to really nan modern nett works, and astir group personification nary thought it exists. The basal thought is that WDM uses aggregate wavelengths of ray to caller overmuch accusation onto a azygous fibre optic cable, which allows those cables to coming overmuch and overmuch accusation complete clip — you’ll comprehend Gary telephone it “virtualizing” a fibre optic cable, for illustration you’re turning a azygous cablegram into two, aliases five, aliases 10. This is evidently hugely important arsenic nan world’s nett usage increases and data-hungry applications for illustration streaming video and generative AI ramp up.

Ciena didn’t invent WDM, but it was nan first institution to deploy it commercially successful nan ’90s — and I wanted to cognize really Gary was managing his finance successful pushing that exertion guardant and whether he was reasoning astir nan adjacent benignant of tech that mightiness disrupt it.

I too wanted to cognize astir Ciena’s customers. There are only truthful galore companies building dense oversea cables and elephantine accusation centers, and it won’t astonishment you that nan customer group has mostly shifted from telecom providers and ISPs to elephantine unreality computing companies for illustration Meta and Google and Microsoft complete nan past less years. Just a less months ago, Meta announced it would net $10 cardinal to build its ain exclusive subsea cablegram stretching astir 25,000 miles. Ciena sits correct successful nan mediate of that analyzable narration betwixt manufacture and infrastructure, and I deliberation you’ll find Gary’s position to beryllium beautiful unique. 

We too sewage into nan fracturing authorities of nan nett and what it intends that group successful different geographic locations, constricted connected various levels of authorities control, acquisition nan online world differently. Connecting cables stretching crossed continents intends nan group connected either extremity of those cables mightiness personification very different ideas astir nan internet, and Ciena has to return each of that into account.

See, I’m guessing you didn’t cognize astir Ciena before, but almost each azygous Decoder thought is correct here, sitting connected nan backbone of nan internet.

Okay, Ciena CEO Gary Smith. Here we go.

This mobility and reply has been lightly edited for magnitude and clarity. 

Gary Smith, you’re nan CEO of Ciena. Welcome to Decoder.

Thank you. Good to beryllium here.

I americium very excited to talk to you. The Decoder squad and I were talking earlier astir really we emotion stories of hidden companies that tally nan world, and Ciena very overmuch feels for illustration 1 of those companies. It is simply a immense subordinate successful networking. It’s a immense subordinate successful nan early of our networks. There’s immoderate AI to talk about. There’s undersea cables to talk about, which is ever fun. Quickly, for everyone, image what Ciena is and what you do.

Basically, Ciena is nan starring exertion institution successful nan world for providing high-speed connectivity. So if you deliberation astir each nan networks that personification been enabled astir nan nett and astir nan world, or, arsenic you alluded to, submarine cables, Ciena is really nan driving portion down that high-speed technology. Even pinch mobile connectivity, terrestrial connectivity, and submarine cablegram connectivity, we’re fundamentally nan champion successful nan world astatine moving optical bits.

I ever deliberation astir it arsenic 2 internets, right? There’s nan nett we acquisition — nan integer nett —  and past there’s nan beingness internet: nan existent cables and wires that nexus our networks together and nexus america together. That is Ciena’s business, moving these cables, figuring retired really to move accusation crossed them overmuch quickly, and figuring retired really to move overmuch accusation crossed them. 

Ciena’s been astir for a minute. How has nan move betwixt what group are doing connected nan integer nett astir consumers acquisition and what you petition to do connected nan beingness nett changed? It seems for illustration point we don’t ever really get to talk about. I’m very funny to inquire you astir it.

I deliberation we devour astir of nan nett now successful a mobile form, connected our iPads, iPhones, aliases whatever. We still personification immoderate desktops, but it’s each laptops. The first constituent of connectivity location is mobile. It’s disposable to america each nan time. But what we don’t deliberation astir is that it’s only mobile until it’s not. It needs to get terrestrialized to nan nearest area wherever it comes down into terrestrial —  typically fibre because to get really precocious speed, you petition to usage fiber. Wireless has immoderate limitations astir that. So basically, until it gets to immoderate mobile application, its existent nonsubjective is to get terrestrial into that compartment building arsenic quickly arsenic possible.

Then, from nan bottommost of nan compartment building is erstwhile each nan magic starts, pinch nan beingness fibre cables and nan networks that spell astir nan world. If you personification an inquiry, depending connected what it is, that could require a different continent. That goes down done nan compartment building and retired crossed nan oversea and backmost to you. But that’s invisible to america all. We’re tin to do it astatine specified precocious speeds now that it’s transparent to nan applications that you’re using.

That’s nan information I really want to excavation into. Intellectually, I deliberation I’ve ever understood that. I deliberation astir group understand that location are servers and accusation centers elsewhere and we are communicating pinch them somehow. But astatine immoderate constituent we petition to deed a fibre connection and really talk to those servers. 

What I’m trying to understand is that there’s nan personification exertion furnishings of nan nett — we’re each going to watch a bunch of Instagram reels aliases something. Then, there’s nan nett we petition to build to support that. What’s nan narration betwixt those two? How often do you think, “I spot nan adjacent group of applications that are coming connected phones, I spot nan adjacent group of devices that group whitethorn want to use. aliases I spot nan emergence of streaming services. We amended commencement building an nett that tin support it?” That move often seems subsumed successful immoderate compartment bearer aliases accusation halfway conversations. It very seldom comes to nan forefront.

Because it’s nan information that connects each of this stuff. Everybody focuses connected things for illustration AI, Netflix, aliases immoderate correct now. How do you get those things to manifest themselves to nan personification and to enterprise? The reality is that it required a monolithic build-out complete nan past 2 decades for a fibre infrastructure that fundamentally connects each these accusation centers together, that connects them done submarine cables, and connects them crossed countries. It has intelligence connected it truthful it knows wherever to spell to get that information. That has evolved complete nan past 2 decades. It continues to germinate because if you deliberation astir immoderate of nan business models that we now return for granted, for illustration Uber, that wouldn’t beryllium disposable if you couldn’t get instant consequence to it.

Twenty years ago, that would not personification been imaginable arsenic a business model. There was an absorbing constituent successful nan early 2000s wherever location was this monolithic overbuild of fibre capacity. It was benignant of nan telecom atomic wintertime wherever we had overmuch capacity than apparently we’d petition for nan adjacent 2 decades. People built retired each of these ample fibre networks and nary 1 came. But that enabled business models to return ample amounts of bandwidth astatine debased cost. That created business models for illustration Amazon, which weren’t tin to get stimulated and beryllium sustainable until they had ample amounts of dependable connectivity. So it’s perpetually evolving pinch applications that are demanding overmuch higher bandwidth. We’re successful an era of that now pinch AI for sure. The networks personification to drawback up and facilitate that.

Let maine inquire astir nan networks. Let’s opportunity I want to build a web successful immoderate agrarian information of nan country. Do I conscionable telephone Ciena and say, “All right. We’re going to get to work. Go excavation immoderate trenches”? Do I tally nan network? Do you tally nan network? How does that work?

We don’t tally nan network. Those are nan activity supplier carriers. If you return North America arsenic an example, location are hundreds of carriers that do nan conception past mile information retired successful nan agrarian areas. Then, there’s nan Verizons, Comcasts, and AT&Ts of this world that past facilitate each of that connectivity to nan consumer. We proviso nan exertion that powers their networks basically. For them to get that high-speed connectivity, Ciena’s exertion goes connected nan ends of those fibre cables that allows nan velocity and throughput to proceed to thrust nan capacity.

What we fundamentally do is virtualize a azygous information of fiber. So alternatively of having that mini thread, which is astir a hairsbreadth thread successful position of weight and distance, we tin multiply that many, galore times. That’s hundreds of virtual fibers because of nan exertion we usage astir it. That’s enabled nan afloat scaling of nan internet. It’s enabled nan scaling of this world connectivity arena that we have, and it’s astatine nan halfway of scaling for AI connectivity now and into nan future.

That halfway information of exertion wherever you’re multiplexing and virtualizing nan azygous information of fiber, that was Ciena’s ample exertion bet. I judge it’s called WDM. Explain that to group very quickly.

Basically, it’s virtualization. Where you’ve sewage 1 information of fiber, [WDM] makes it look for illustration aggregate fibers. Depending connected nan region and what you’re putting down, it tin beryllium hundreds of fibers, which is really physically manifested arsenic a azygous fiber. So you don’t petition to put overmuch fibers into nan ground. With nan exertion we personification connected either extremity of it, you tin conscionable modular it up. 

So, it’s nan virtualization of fibre that has enabled this almost seamless matrimony betwixt nan applications, to your point, and nan driving of each nan web postulation pinch nan existent network. Through our exertion development, we’ve grown nan expertise to spell do that faster than Moore’s Law. We now personification a caller information of technology, called WaveLogic, that tin do 1.6 terabits of accusation down a azygous information of fiber.

It’s ever been explained to maine that nan fibre is nan fiber, and we’re conscionable sending ray backmost and forth. It’s nan pieces astatine nan extremity that really create nan further bandwidth to create that further capability. Is that overmuch aliases small true? Are you conscionable focused connected nan bits astatine nan extremity that talk to each other?

Absolutely. There are exertion developments incorrect nan fibre that assistance that, for sure, and there’s been a batch of that betterment from companies for illustration Corning successful nan fibre world. But basically, nan magic is nan exertion that goes connected nan extremity of those fibers. When you deliberation astir it, if we had to modular by digging up nan spot each clip we wanted to put overmuch fibers in, it’s conscionable not practical. We tin get a tremendous magnitude of explanation and virtual capacity moreover connected aged fibers conscionable by putting our exertion connected nan extremity of it.

You were talking astir scaling faster than Moore’s Law, which is astir a doubling each 18 months. Decoder listeners are very pedantic. They will show maine that’s not really what Moore’s Law means, but I deliberation that’s really you’re utilizing it. I admit our listeners very much, but I don’t deliberation that’s what applies here. You’re talking astir a doubling of bandwidth each 18 months. 

Yes.

You’ve been doing WDM since 1997, right? This is nan exertion liking of nan company. Is it nan capacity of WDM wherever you’re utilizing aggregate wavelengths of ray crossed a azygous fiber? Is that what’s doubling?

Yeah, it’s our expertise to proceed to thrust that. When we first started, we could multiplex and support it very simple. It was a azygous information of fiber. We thought we could put 4 virtual fibers down there. That was revolutionary astatine nan time. Many of nan carriers we went to pinch that said, “Oh, that’s fantastic. We’ll ne'er petition overmuch than that.” Then, we figured retired really to do eight, past 16, past 32, past 64. And we’re way, measurement beyond that now. 

So what that intends is you personification that azygous information of fibre that looks for illustration 64 fibers. That’s enabled this monolithic scaling of architecture astir nan world. Then, we deploy that exertion not conscionable pinch conception connectivity, but  crossed nan authorities and afloat continents — 8,000, 10,000-mile submarine cables. We tin support that benignant of capacity crossed nan submarine cables.

Do you conscionable discarded these boxes to nan telecom and accusation halfway providers and locomotion away? Do you personification ongoing support?

No, it’s a very integrated partnership. Most of nan awesome carriers —  I deliberation 96 percent of nan awesome carriers astir nan world — are Ciena customers. These are collaborations that we’ve worked connected for aggregate decades. We thief negociate nan networks. We do a batch of nan installation activity for them. We do nan planning. We personification nan package that really manages nan web and looks for predictive issues aliases challenges and switches automatically. If location are problems connected definite fibers, it will observe that and move it through. So, there’s a batch of underlying exertion and collaboration betwixt america and each nan activity providers. 

Also each of nan hyperscalers. Pretty overmuch each of nan hyperscalers usage Ciena to nexus their accusation centers astir nan world. We partner pinch them arsenic bully connected exertion developments that are circumstantial to their networks. You look astatine nan hyperscalers, immoderate of nan largest networks successful nan world, and they’re very complicated, multi-continent, metro, long-haul, submarine cables. The biggest players and nan biggest owners of capacity connected submarine cables now are really nan unreality players. That utilized to beryllium nan accepted activity providers, but now it’s nan likes of Google and Meta that really ain a batch of nan world capacity connected those submarine cables.

This is nan constituent that I was talking astir astatine nan beginning. It seems truthful difficult to understand, and it’s truthful absorbing to talk to you astir it because you’re successful it. The nett we acquisition is evidently changing nan dynamics of nan nett we build. So. I acquisition my telephone and there’s a bunch of worldly happening connected immoderate accusation halfway owned by Google, Microsoft, aliases whatever, and that intends those companies now ain astir of nan capacity of undersea cables. 

I don’t deliberation that concatenation of events is intuitive unless you’re paying attraction to it. But conscionable talking to you for 13 minutes here, that seems very intuitive to you. It makes consciousness to you that they would personification nan capacity because I’m not sending astir arsenic overmuch accusation arsenic a personification crossed nan ocean. Do you spot that changing? How accelerated has that grown? Describe that move to me.

Take nan submarine cables arsenic an example. It’s a bully proxy for what’s happened here. From nan 1980s to 2010, this was each funded by nan activity providers. It was a measurement of getting transatlantic telephone conversations mostly to Europe and a mini spot to Asia. These companies, for illustration British Telecom and AT&T, would personification these cables, they would get together a consortium, and, arsenic a syndicate, money these submarine cables. With nan advent of cloud, you had these players that wanted to personification very high-speed connectivity. Take for illustration Meta, Google, Microsoft, aliases immoderate of these players. If they were going to beryllium successful nan European market, they needed to personification very precocious speed, dedicated capacity. So successful astir 2010, you began to spot nan unreality players purchasing nan capacity of those submarine cables.

In nan past 5 years aliases so, you’ve seen Google statesman to ain galore of these cables, pinch Meta and others too. So, it evolved from, “Hey, it’s each this activity supplier and it’s conscionable telephone calls.” When you want to scope your aunt successful Europe, successful India, aliases whatever, past it’s conscionable a telephone call, which is simply a very mini magnitude of data. The magnitude of accusation that’s now being required by these unreality players is aggregate overmuch times than that. You’ve sewage a batch of graphics going complete it arsenic well, which takes a batch of bandwidth. So nan petition for bandwidth has grown dramatically. It makes consciousness that nan unreality players want to nexus their accusation centers. If they’re putting a accusation halfway successful India and want to nexus it to North America, they want to ain nan connectivity for that, and it’s a overmuch higher speed. So they’re not conscionable buying nan capacity. They’re really taking powerfulness and owning nan cables.

So, there’s been benignant of an betterment of that complete nan past 5 years. The first 10 years was, “Hey, we will return nan capacity now.” Their networks are made up of a hybrid of owning nan cable, owning some, aliases they rent it from nan activity providers. But you’ve now got, I think, 600-plus submarine cables astir nan world. You’ve sewage astir 1.5 cardinal kilometers of fibre astatine nan bottommost of nan oversea facilitating this, and nan unreality players are really driving that marketplace now.

That’s going to lead america into nan inevitable reside we’ll personification astir AI, but I conscionable want to enactment connected this for 1 second. How has nan verticalization, from “what we discarded is virtualized compute capacity” down to “we will now ain nan cables successful nan h2o and verticalize our business and make judge we ain it extremity to tail,” changed your company? 

We’re looking at, “There’s WDM successful 1997. This is nan halfway invention that lets america get overmuch capacity retired of nan fibre networks. We’re initially going to discarded that to telecom companies to do overmuch telephone calls aliases nan early internet.” Now, aggregate generations in, you’re trading it consecutive to Google to nexus accusation centers truthful that it mightiness tally AI workloads.” It feels for illustration that would personification immoderate portion connected your roadmaps and your go-to-market. How is that expressed?

The betterment has been specified that nan first appreciators for that exertion were evidently nan activity providers. As nan nett began to summation traction successful 2003, 2004, you began to spot nan unreality players get overmuch consenting successful nan web because if they’re going to monetize and get to nan eyeballs that they wanted, nan web really becomes important to them. So, there’s been a dependable summation successful appreciation of that moreover anterior to nan AI piece, and they’ve spell overmuch overmuch active. I mean, we really didn’t discarded to nan unreality players until astir 10 years ago, and we had zero marketplace banal there. Now, we’ve sewage nan main marketplace banal pinch a starring subordinate successful connecting accusation centers and unreality players astir nan world.

Submarine cables are nan aforesaid benignant of thing. We really didn’t attraction connected nan submarine cables pinch our exertion because location wasn’t that overmuch capacity being required. We’ve now sewage number 1 banal successful submarine cablegram connectivity astir nan world because they worthy very high-speed capacity. So nan unreality players personification gone from being a very mini percent of our business to complete 50 percent of our business now being, consecutive aliases indirectly, unreality and hyperscalers. So it’s a very important displacement successful nan business, and that’s really accelerated successful nan past 5 years.

I deliberation this is simply a awesome clip to inquire nan classical Decoder questions. You’re describing a displacement successful nan business and a displacement successful your customers. How is Ciena organized now? What does that org level scheme look like?

It’s been easier for america successful immoderate ways because we’ve ever been nan starring exertion company, truthful it’s really astir who appreciates that exertion and collaborates. This displacement to nan submarine markets and to unreality players has mostly been a bully caller for Ciena because we move very quickly, and we’re astatine cutting-edge technology. The latest exertion we personification is really connected three-nanometer chips. We were nan first institution successful nan world to personification a 3nm spot really beryllium utilized successful nan telecom space, and we’re now really moving connected our second. We’ve sewage that out, it’s carrying postulation astir nan world, and we’re moving connected our 2nd type of that. We’ve ever been astatine nan starring separator of technology, and it really is simply a earthy caller pinch these unreality players.

So, we’re organized very simply. We personification a large-service supplier squad astir nan world, a dedicated squad for nan hyperscalers and cloud, and an engineering squad that useful pinch them connected co-development and worldly pinch that benignant of technology. I’m a awesome believer successful simplicity of organizational design. So, we personification a very elemental organizational building that’s evolved to reside that. That’s really we’re tin to modular arsenic quickly arsenic we have.

You’ve sewage nan 2 ample markets — nan telecoms and nan hyperscalers —  and you personification nan engineering organization. I’m assuming nan telecoms and nan unreality providers want different things. How is that expressed successful what nan engineering connection goes disconnected and builds? 

It’s interesting. There’s a batch of commonality astir what they want. If you deliberation astir it from an engineering constituent of position and nan latest WaveLogic exertion we conscionable developed, we really return that aforesaid exertion and we deploy it successful somewhat different variants to immoderate markets. So, we get a amended modular of betterment complete that. Obviously, we create a azygous spot and past do variants of it for circumstantial applications that they want, but that aforesaid exertion is fundamentally consumed crossed nan activity supplier world because they each want nan aforesaid thing: amended economics crossed nan fibre that they’ve sewage and accrued bandwidth.

The peculiar sensitivity, I would opportunity — what’s really nan value betwixt nan 2 markets — is nan unreality players are overmuch overmuch focused connected power, which we each comprehend astir from a accusation halfway constituent of view. It manifests itself precisely nan aforesaid measurement successful nan telecom networks. We do variants that are powerfulness optimized for nan unreality players, but that’s nan predominant difference. That’s conscionable taking nan aforesaid halfway exertion and doing a different type of it that’s prioritized astir power. That enables america to modular nan betterment and nan remainder of it. So, we personification a azygous world engineering squad focused connected this halfway technology.

Ciena has ever been a very focused player. We’ve been very focused connected conscionable high-speed connectivity. This has enabled america erstwhile astir of our competitors are trying to do mobile aliases different kinds of things. For nan past 3 decades, we conscionable wanted to beryllium nan champion successful nan world astatine moving optical bits astatine a precocious speed. The opportunity we personification now is progressively into nan section and perchance moreover incorrect nan accusation halfway pinch that aforesaid halfway technology, and that’s each successful beforehand of us. We get zero gross from location correct now. But it’s nan aforesaid customers, truthful that’s an breathtaking opportunity for america successful nan future.

I want to talk astir that a mini spot more, but tin I conscionable inquire 1 overmuch question? You said power. That suggests to maine that you’re building a accusation center, you personification an powerfulness budget, and past you clasp each nan vendors to immoderate number connected nan connection to make judge you deed your powerfulness budget. You’re emotion that too, moreover arsenic nan personification is like, “Here’s nan instrumentality that connects to nan fibre line.”

Yes. It manifests itself different obviously, but everybody talks astir nan accusation centers and nan powerfulness and nan remainder of it. Everybody is very focused connected that for evident reasons. But that aforesaid rumor deploys erstwhile they recreation retired onto nan web too. You put amplifiers connected nan fibre to do that, and astir these amplification sites, they want ace debased powerfulness because they are constrained astir powerfulness and space.

I’m assuming they would alternatively locomotion their powerfulness money connected moving nan GPUs arsenic basking arsenic they can. 

Exactly. They don’t want to locomotion it connected nan communications part, aliases they want to locomotion arsenic mini arsenic imaginable connected that. They want it optimized. We’re tin to do that for them successful position of nan footprint of nan technology. We tin now get down connected a azygous plug what utilized to beryllium a rack of cords. Quite literally, a six-foot-wide rack connected a azygous plug, that aforesaid capacity. That’s what we’ve evolved complete nan past 2 decades with. So, we’re bully placed pinch these guys to proceed to thrust down nan powerfulness usage connected nan network, not conscionable successful nan accusation center.

How ample is Ciena? How galore group are connected each of these various teams?

We’re adjacent to astir 10,000 group worldwide. We’re very distributed. This year’s connection gross is astir $4.4 billion, point for illustration that. We’re profitable, and we personification a beardown equilibrium sheet. We very overmuch put consecutive into this technology. Because we’ve been specified a focused subordinate astatine it, we felt that this high-speed connectivity would beryllium appreciated eventually, and it’s really coming into its ain now. You personification to make these investments for nan agelong term. Some of our technologies return five-plus years to evolve. We’re fortunate successful this clip correct now. It’s a bully intersection constituent wherever high-speed exertion is ace appreciated.

Is that an moreover split? Is it 3,300 successful engineering, 3,300 successful hyperscaler sales-

No, it’s fundamentally predominantly engineering. As you tin imagine, this benignant of exertion is overmuch astir engineering, truthful overmuch than half of our squad are engineering talent. We’ve sewage applications engineers astatine nan beforehand extremity who thief make judge we understand nan applications and activity pinch nan customers connected that, but overmuch than half is engineering. As I said to you earlier on, it’s a very elemental structure.

One of nan things that really strikes maine is location is this halfway enabling invention, WDM. The institution is built astir it. Ciena’s made a less acquisitions complete nan years. You’ve led a less of them. There was one successful 2019 for Centina Systems. Is WDM still nan bosom of it? Is that proprietary Ciena we’re building astir it? Is location a adjacent measurement to usage fibre that’s coming?

No, it’s fundamentally nan recreation that we’re on. We’ve made aggregate acquisitions, but it’s each been astir nan halfway mission, which is high-speed connectivity and nan things we petition astir that. A batch of nan acquisitions personification been astir vertical integration of that, truthful we personification overmuch powerfulness complete it. It’s not conscionable nan halfway technology. It’s nan things astir it that you petition to do. Most of those surrounding technologies were wherever we could attraction and proviso competitory advantage by doing point to them. 

Over nan years, we’ve worked very cautiously astatine acquisitions and integrated developments that make america vertically integrated truthful we tin powerfulness that. There’s advantages to powerfulness and scale, but what really drove america was that we deliberation we tin put competitory advantages successful each of nan technologies that we stitchery astir nan halfway technology, if that makes sense.

The logic I’m asking that is because often you mightiness want to bargain a institution that’s early to nan adjacent turn, but it seems for illustration WDM is still nan bosom of what you’re doing, and you don’t spot a decorativeness connection there. 

Basically, it’s this technology. The existent type that we attraction connected is nan coherent technology, and that’s what has enabled this DWDM to modular truthful much. But location are different technologies astir it that we’ve developed, for illustration nan SerDes — nan Serializer / Deserializer — and nan kinds of things that are for analog conversion, which is incredibly difficult to do. We’ve sewage immoderate of nan champion exertion successful nan world astir that. It’s nan moat that you put astir that, but it’s not nan adjacent thing. We deliberation there’s a batch of headroom, peculiarly because this exertion is each deployed correct now. Think astir it extracurricular nan accusation center. So arsenic soon arsenic it wants to coming extracurricular nan accusation center, that’s Ciena.

The opportunities we personification pinch nan aforesaid kinds of exertion are now becoming evident incorrect nan section — these campuses are getting ace ample now — and yet will beryllium incorrect nan accusation center. That’s because the  GPU and compute finance that’s going connected requires higher and higher velocity complete longer and longer distances, moreover successful immoderate of these accusation centers. First of all, they’re enormous. You’ve sewage fibre going astir them, sometimes aggregate kilometers incorrect a azygous accusation halfway pinch that fibre getting wrapped around. 

We deliberation there’s an intersection constituent for our exertion there. The exertion location correct now, which is conscionable called direct-connect, is required to nexus each of nan racks incorrect nan accusation halfway and nan intra-data center. The physics of that is getting challenged arsenic these GPUs require higher and higher speed. So, we deliberation there’s a existent opportunity for america to intersect that, to your point, pinch nan aforesaid benignant of halfway exertion that requires immoderate variations complete nan adjacent 1–3 years.

Let maine inquire you nan classical Decoder question, and past I want to get into that. You’ve been astatine Ciena for a agelong time. I deliberation you’ve been location for 30 years. You’ve been nan CEO for almost 25 now. How do you make decisions? What’s your framework?

Depends connected what benignant of determination it is, right? Not each decisions are equal. I very overmuch consciousness that it’s a squad game. When we make strategical decisions — which I deliberation is what you’re  alluding to pinch really we put and what semipermanent things we’re focused connected — we’re strategically aligned astir what we want to spell do. We’re a very focused company. Back to nan constituent I was making earlier, I deliberation group admit nan champion of breed, and we want to beryllium nan champion successful nan world astatine what we do. The northbound prima is very clear to us. Then, it’s astir what things we petition to do to get retired into nan early connected that.

From that constituent of view, nan determination making is somewhat easier because we cognize we’ve chopped nan field, truthful we cognize wherever we’re playing on. There’s not immoderate awesome reside astir adjacencies and things that we mightiness want to get into; it’s each based connected our halfway technology. To reply your question, if it’s point strategical astir those investments, it’s ever a squad game. We’re ace collaborative. It’s really we activity and get cross-functional input into each of those things. So, it’s a process. 

But I would opportunity that I deliberation nan domiciled of a CEO sometimes is to say, “Okay. We’ve had nan debate. This is nan wide position of what we want to do. Let’s go.” I deliberation information of nan domiciled of nan CEO is to facilitate nan champion conversations and discussions and past thief thrust to a conclusion.

Let maine springiness you a hypothetical that I fishy you will mobility off, but I’m going to effort anyway. You’re looking astatine 2 ample groups of clients. You’ve sewage your telecom companies, and you’ve sewage your ample unreality providers who are each racing into AI. You personification immoderate opportunity to move that business by going into nan accusation centers, not conscionable landing nan fibre astatine nan doorstep. That seems for illustration nan overmuch richer opportunity. 

I look astatine nan authorities of nan telecoms successful nan United States, for example. They’re not expanding much, right? They’re churning customers betwixt them. It would look very evident that your afloat squad would say, “Don’t liking astir them truthful much. We petition to put each of our attraction connected nan AI providers because that is wherever there’s maturation utilizing our aforesaid halfway technology.” But past you still personification to activity nan telecom customers, I imagine. How do you equilibrium that out? How do you make that determination to say, “These investments are going to spell complete here?”

It’s really overmuch easier for america because, backmost to nan constituent I was making, it’s nan aforesaid benignant of halfway technology. When we move nan changeable down nan conception for nan unreality players, we tin usage that to nan activity supplier abstraction because it’s nan aforesaid halfway technology. In position of their needs, location are really a batch of similarities. Another measurement of reasoning astir this is erstwhile we commencement talking astir nan accusation halfway and nan remainder of it, we proviso optical systems wherever we do nan afloat constituent for nan activity providers. And we do that beautiful overmuch for nan unreality players too. So we do each of nan systems for nan software, what we telephone nan WDM modem technology, and nan connection systems. We do each of that, and often we’ll instal it, support it, and support it. We do that for activity providers and we do that for nan unreality players.

Then, to nan constituent astir nan opportunity successful nan accusation center, it’s not needfully astir providing those complete systems. It’s taking them, putting them successful plugs, and past putting them successful components. So it’s a different benignant of play, but it’s still nan halfway technology. So, point you do to beforehand that too applies to our systems business, and our systems business is immoderate activity supplier and successful nan cloud. You don’t personification to make nan “which are your favourite children?” benignant of choice, which is wherever you were going pinch that. I deliberation that’s different usage of a institution staying ace focused connected its halfway exertion and knowing what worthy we bring to nan world. That is very difficult for anybody different to replicate,

Well, tin I inquire you astir that? Because it feels for illustration nan Trump guidance is incoming. By nan clip group comprehend to this, he will personification been inaugurated and we’ll beryllium disconnected to nan races pinch a caller benignant of business ambiance coming successful nan United States. Mergers will beryllium successful mode again. They personification not been successful mode complete nan past 4 years. If I was moving Google aliases Microsoft, I would say, “Well, this is nan halfway exertion that’s going to make my accusation halfway overmuch businesslike and move accusation faster connected my cable. I’m conscionable going to bargain this company.” Have you been approached to beryllium acquired?

Well, I’m not going to–

I’m conscionable wondering because I tin spot why complete nan past respective years, each of that reside has chilled. But it’s too singular to maine that a institution for illustration Ciena has remained independent for 30 years.

That utilized to beryllium nan reside each nan time. Think astir 20 years ago. I’m not judge immoderate of your viewers will retrieve immoderate of these names: Lucent, Alcatel, Nortel, moreover Nokia. The exemplary was each what I telephone nan “generalist model.” They were really rotation outs from their telephone companies for illustration Marconi. Northern Telecom came retired of Canada. So pinch nan model, we had to beryllium extremity to end. You had to put switches, routers, handsets, mobile infrastructure, and this constituent called transport. We said erstwhile we started, “No, we’re going to conscionable attraction connected nan bearer information because we deliberation it tin get to scale.” 

What’s happened complete nan past 2 decades is that nan generalists, because they couldn’t walk to beryllium astatine nan cutting separator successful each of those areas, personification each struggled. You trace nan genesis of each of those companies now and fundamentally they’re each successful Nokia. With Alcatel and Lucent and each nan remainder of them, nan euphony stopped and that’s wherever they ended up.

The constituent I’m making astir that is nan world’s excessively competitory now for nan afloat end-to-end constituent and being a generalist supplier. It conscionable perfectly is. They utilized to opportunity to us, “Well, erstwhile are you going to get bought?” We utilized to say, “Listen, we’re a nationalist company. We personification each nan fiduciary responsibilities that you would expect pinch a nationalist company, but we deliberation we tin get to modular and beryllium a existent institution conscionable doing what we’re doing.” Now, these things return a while and we’ve been nationalist for 25 years, but we’re astatine a constituent now wherever we perfectly personification scale. We’re very beardown financially. We tin put successful this benignant of technology. We’ve sewage nan number 1 marketplace banal successful each nan cardinal markets that we want to play in. So, we’ve sewage a bully opportunity to thrust shareholder worthy from here.

Do you deliberation that DWDM, nan multiplexing you do to virtualize nan fiber, is tin of a moat? You were describing nan different acquisitions you’ve made and really you business nan halfway exertion pinch different things to participate different markets arsenic nan moat. But is that halfway exertion point that… I don’t cognize if Mark Zuckerberg woke up 1 greeting and was like, “screw it, I’m unfastened sourcing it,” he could conscionable do it? Or is that overmuch specialized?

There are different companies that personification variants of this technology, for sure. It’s conscionable that we’re tin to instrumentality it faster and quicker and amended than anybody else, and we personification nan halfway competencies astir it. A spot of an affinity is TSMC. People benignant of cognize really to do [what TSMC does], but they can’t do it, right?

You tin spell to ASML and inquire for a instrumentality and that’s not wherever it stops.

Yeah. Because it’s people, and it’s nan folks that understand that it’s nan five, 10 percent of each of these areas that really make nan value to things erstwhile you put it and each nan things we’ve built astir it each together. So for illustration pinch immoderate of these things, it’s a confluence that makes up nan competitory advantage. It’s erstwhile you get down to nan existent technologies. 

It’s each of those things that proviso nan moat for us. It’s nan truth that we’re focused and nan truth that we’re now truthful embedded pinch these cardinal unreality and exertion companies and were information of nan collaboration process astir nan betterment of their networks. It’s nan relationships that you build up, that trusted narration and nan exertion collaboration complete time. That’s why we deliberation we’ve sewage an opportunity to return that into a afloat caller marketplace for america pinch nan section and yet incorrect nan accusation center.

I want to talk astir 2 things that look for illustration they’re going to hap to nan hyperscalers, successful particular, complete nan adjacent four, 10 years. One of them has a batch to do pinch subsea cables and nan different 1 is evidently AI. Let’s commencement pinch subsea cables. If I look broadly astatine our nation’s ample companies — Amazon, Google, Meta, Apple — they’re astir to participate into a world wherever an emboldened Donald Trump wants to conscionable reset nan world order. They ain cables that nexus our continents together. There’s a batch of group who want to break nan nett isolated successful different ways. We might prohibition TikTok. We mightiness not prohibition TikTok. China doesn’t fto our apps there.

There’s a batch of liking successful what is happening connected our networks that nexus our countries together and who gets what where. Then there’s conscionable nan reality that they are wires successful nan ground. Bad things hap to them. They get cut. There are wars. How overmuch of that do you prosecute pinch personally? How overmuch do you deliberation about, “Okay. There are immoderate fraught geopolitics that are astir to change. I petition to make immoderate decisions to get up of it, beryllium alert of it, insulate myself against it, aliases insulate Ciena against it?” How overmuch of your clip do you locomotion connected that?

I mean, location are nan headings of things you tin powerfulness and past things that you can’t powerfulness but petition to beryllium mindful of, right? It’s decidedly successful that 2nd list. I could logic that complete nan past 5 aliases 10 years we’ve had alternatively a batch of geopolitical dynamics going on. We are mindful of that, peculiarly because we tally successful aggregate countries, truthful 80 countries astir nan world. Our exertion is wide deployed. We are mindful of those kinds of dynamics, and I’ll springiness you an example.

We made a determination successful nan early 2000s that we would not spell successful and beryllium a supplier to nan Chinese marketplace for its awesome activity providers. There was a afloat group of thought processes that went into that. One of our competitors astatine nan clip was Huawei and it was conscionable emerging. I don’t deliberation group admit this, but nan first existent loop of exertion that Huawei came retired pinch was really successful our space, truthful measurement earlier each nan mobile worldly and each nan different omnipotent things that it’s now doing. So astir 2003 we said, “What’s this company, what are they doing, and really is it achieving worth points that are conscionable small than our cost?” Turns retired that we’re being subsidized by nan Chinese government, right?

It’s for illustration we’ve seen this movie respective times since 2003. 

So 1 of nan thought processes that we had, conscionable to springiness you an illustration , we said, “You cognize what? We will not compete pinch it consecutive successful nan China market. It evidently wants america location because we’ve sewage starring exertion and nan remainder of it. We’re really not going to manufacture successful China either. So we’re going to beryllium nan antithesis, if you like, of Huawei successful each azygous way. We’re going to beryllium nan replacement that’s not a Chinese manufacturer, and we won’t tally there.” 

That was a very arguable thing. You ideate a young institution that’s conscionable gone nationalist and going, “Hang connected a minute, why are you not going into nan largest marketplace and fastest expanding telecom marketplace successful nan world?” But we had nan spot of our convictions. It’s taken a while, but I deliberation mostly that was a bully determination for america because we didn’t get distracted by that Chinese market.

They’ll springiness you 10 percent of that market, but they’ll make judge you won’t get point else, and you’ll partner pinch a conception partner. I spent a batch of clip successful Asia. I lived successful Asia for a number of years earlier I came to Ciena. And I saw that movie, to your point, play retired successful truthful galore different ways. I was ace delicate to that, arsenic was nan team. So, that is an suit of america doing point because of nan geopolitical dynamics astatine nan clip and america making a decision. You don’t cognize really that’s going to play retired because things tin change., You’ve conscionable sewage to beryllium smart astir what you deliberation is nan champion constituent for nan shareholders and your institution and instrumentality to it.

Do you mostly recreation nan lead of nan clients? Do you personification your ain points of position connected geopolitics? I’m reasoning of things for illustration erstwhile you onshore nan cablegram successful Europe and your devices location decoding each nan postulation that location are a number of European spy agencies that mightiness want to beryllium correct adjacent to that. 

The NSA successful our authorities would emotion to beryllium correct adjacent to that. When you onshore successful different countries that personification different kinds of privateness and accusation concerns, they mightiness want to beryllium a information of that. Is that point wherever you say, “Look, Meta owns this cable. You talk to Meta. We’re going to do what nan customer says,” aliases is that, “We are simply not going to build these cables successful definite devices”?

We’re really beautiful fortunate that we don’t personification to make immoderate of those reliable decisions because it’s not our cable. So to your constituent —

But nan accusation going complete nan cable, that’s you, right? You’re encoding and decoding it?

Yeah, that’s what we’re doing, but moreover that exertion is owned by nan customer. We sold that to nan customer, and what they do pinch it is wholly up to them. We don’t personification powerfulness complete that. It’s their network.. It’s their property. You deliberation astir these submarine cables. Someone owns nan cable, and we put nan exertion connected nan extremity of it. It’s their technology. They ain that, and they tally it arsenic well. We don’t tally it. So they tally those networks. We’re fortunate successful that we’ve ever been tin to enactment 1 measurement down immoderate of those dilemma questions. It’s not point we personification to opine on.

When you deliberation astir nan existent cables, they’re successful world waters. What’s nan longest 1 that you operate?

I deliberation it’s astir 10,000 kilometers. Some of these cables are astir nan Pacific wherever you get nan ample distances, truthful they are very, very agelong cables. A batch of them extremity disconnected connected different islands and places and spur off. Some of nan caller cables going successful are spurring disconnected successful different places. We’ve too developed a exertion that overlays that provides for resilience. So if you get a trim connected a peculiar cable, past we tin reroute it depending connected nan architecture. 

It’s called GeoMesh. It’s package and exertion that’s embedded into our halfway offerings and enables america to proviso resilience crossed immoderate of those submarine cablegram links. In nan normal tally of things, you get I deliberation point for illustration 100-plus faults a year, chiefly trawlers dragging their anchors connected a fibre cablegram because they’re buried astatine nan bottommost of nan oversea until they’re not. I mean, they’ve sewage to recreation up somewhere. Typically, it’s successful nan shallower waters wherever you’ll get immoderate sportfishing alloy recreation crossed it.

Do you ever get angry sharks? Do you ever get a matter relationship for illustration “shark onslaught brought down nan network?”

Actually, that’s a communal mobility I get asked astir it. There is simply a conception astir nutrient attacks. I deliberation it’s zero. I’m judge location are immoderate examples of it that personification tin constituent to complete nan past 3 decades, but I’ve ne'er heard of it personally. I deliberation they’ve sewage different things to liking astir than these mini tiny... it’s astir nan size of a ample hosepipe, truthful I don’t deliberation it’d beryllium peculiarly absorbing to them.

We personification this building that we’ve been utilizing astatine The Verge, my friend Casey Newton came up pinch it ages ago. He calls it nan “Splinternet,” wherever we comprehend 1 cohesive internet, but really we’re fracturing. We’re fracturing into continent-specific, country-specific internets. 

As I talked to you astir nan unreality providers, it’s very evident to maine that we now personification a number of backstage internets operating astatine precocious velocity astir nan world that are conscionable owned and controlled by azygous companies. You personification a agelong position of nan internet. You are 1 of nan less guests connected Decoder who’s ever conscionable consecutive up talked astir Alcatel. You personification a agelong position of nan internet, really we’ve grown it, and what it’s for. The telecoms, by and large, were nationalist champions, right? That’s really they personification thought astir themselves. Even successful nan United States, that’s really they’ve thought astir themselves. That’s wherever they came from.

There’s a caller benignant of nationalism successful America astir our tech giants successful nan Trump administration. Mark Zuckerberg says, “I want nan Trump guidance to spell conflict nan European regulators connected my behalf.” That’s new, it hasn’t recreation up before. We’ll spot if this overgarment fits. He’s trying it on. But nan measurement we build networks is an look of nationalist capability. We haven’t knowledgeable that excessively overmuch arsenic nan internet. It’s been 1 world nett that connects all, and past we do immoderate we want and group our borders. But we haven’t really divided nan networks apart. But now you’ve sewage ample unreality supplier backstage networks. You do personification rising nationalism astir nan world. You conscionable personification a pulling isolated of nan internet. Is that affecting really you are building networks aliases really your clients are asking you to build networks?

I wholly understand nan notion, and I deliberation what you’ve sewage is that a disproportionate magnitude — this is benignant of an English understatement — of nan invention and betterment for each of this has been done successful nan US, amongst each these exertion companies, for sure. Now, nan ample unreality players are investing successful that web because that’s their business model, and nan web is becoming overmuch and overmuch important. When we talk astir nan network, to your point, we talk astir it successful this homogeneous form. 

But if you deliberation astir this successful nan sermon of immoderate of nan ample markets that nan US unreality players are trying to get into… return places for illustration India. When they participate nan Indian market, they are constricted upon connectivity from nan conception carriers. So they tin extremity up pinch nan submarine cables and nan landing stations, but past it’s, “How do I get connected to each nan group I petition to get connected to successful India endeavor and consumer?” They are past constricted connected nan conception carriers, beryllium it Bharti, Jio, Vodafone Idea, immoderate of nan wholesale carriers that are too there, and fiber. There’s ever going to beryllium an interrelationship because arsenic omnipotent arsenic each of these unreality players are, they’re not going to beryllium tin to nexus to everybody’s location crossed nan planet. So you’ve ever sewage this interplay betwixt activity providers and nan unreality players.

What often happens location is that successful immoderate of these countries, nan activity supplier will proviso a circumstantial web for nan unreality player, and they telephone it a Managed Optical Fiber Network, aliases MOFN. And we thief facilitate that. It’s our technology, truthful it matches each of their world networks. But it’s owned and operated by nan conception activity supplier to support Meta, Google, Microsoft, etc. 

Increasingly, I’d logic you’re seeing that interdependency work. So, I wouldn’t opportunity it’s nan counter-argument to nan thought that we’re each splitting up because astatine nan extremity of nan day, to get to nan consumers astir nan world, these activity providers are not going distant successful that regard. That’s not going to change. They are nan only ones that tin proviso that connectivity ultimately, beryllium it nan endeavor aliases nan consumer.

I’m fascinated by this because it does look for illustration nan wide geopolitical dynamics of nan world are changing, and nan nett will alteration pinch it. I conscionable support coming backmost to nan mobility I started with, which is astir really nan acquisition we personification connected nan integer nett evidently impacts nan beingness nett that you are responsible for building. I’m ever trying to find nan touchpoints betwixt nan two. The measurement we designer networks successful India has a nonstop narration to nan Indian nett that those users experience, and it seems for illustration those things are, if not diverging wholly betwixt different countries, surely opening down different paths. That, to me, seems utterly fascinating.

I want to extremity pinch AI here. As you deliberation astir entering their accusation centers and saying, “We tin envision immoderate caller precocious bandwidth, precocious capacity workloads successful these accusation centers,” which for nan past 15 years we personification not really recreation up pinch monolithic caller ones extracurricular of streaming video. Streaming video is simply a lot, but that’s fundamentally what we came up with. Now there’s immoderate caller ones successful AI that mightiness deed each kinds of caller industries. 

Do you deliberation that that is conscionable an exponential emergence successful really overmuch capacity we need, really overmuch powerfulness we’ll petition to use, really overmuch networking capacity that we’ll sustain? Or is it, to make nan comparison earlier to acheronian fiber, building retired a batch of capacity that we’ll yet usage complete time?

That’s a awesome question. Having lived done nan erstwhile play of nan telecom atomic wintertime wherever we built retired each this capacity — and arsenic it turned out, nary 1 came — it did facilitate each these business models that wouldn’t personification accelerated without that glut of capacity. I get asked nan mobility if we’re successful different bubble astir each of these accusation centers. Specifically astir nan accusation halfway piece, I deliberation there’s an insatiable petition for compute, to build retired compute power. These things ever return longer than we each deliberation to monetize and nan remainder of it, truthful we’re astir apt going to spell done immoderate iterations. But to reply your existent question, I’m really of nan different position this clip round. I deliberation we’re underestimating nan magnitude of postulation and bandwidth that will beryllium required to spell do this because we’re already seeing a clip up successful unreality traffic. We’re beautiful bully placed to spot that.

Now, really overmuch of that could I spot to AI? Some of it is, but I’ve sewage nary measurement of really discerning which spot is which, and it’s not our network. But there’s a definite uptick successful unreality postulation conscionable to nexus to each of these accusation centers. We are perfectly seeing that, and I deliberation that’s going to proceed because you’ve sewage a batch overmuch accusation centers coming online successful nan adjacent 18 months, aliases 2 years astir nan world. If they’re going to monetize immoderate of that, they’ve sewage to each beryllium connected for learning, training, and nan remainder of it.

That’s earlier you moreover spot nan applications for aesculapian usage aliases verticalization, immoderate you want to telephone it. Using your ChatGPTs is generating traffic, sure. But past you commencement to get to immoderate of that aesculapian usage, for example, and nan magnitude of graphics that are required. Graphics are astir 10–20 times overmuch bandwidth-consuming than normal data. So, if you commencement to get to nan monetization of that done these vertical applications, I deliberation we’re underestimating nan magnitude of postulation that’s going to beryllium there.

When you strategy retired maturation for nan institution — obviously, you’re a nationalist company, truthful you personification to do it retired successful beforehand of everyone and talk astir consequence — successful your astir optimistic view, is it sustainable, nan title of petition that you spot now? You’re saying we’re underestimating it. I look astatine it perchance a spot overmuch cynically, which is, “Wow, we are building a batch of capacity against business models that don’t exist.” OpenAI has yet to move $1 successful profit, and it wants each of nan powerfulness that nan world tin generate. It wants each GPU that Nvidia tin build. That’s a lot, right? There’s an inherent committedness location that this will each net off. 

Maybe you would telephone that a bubble aliases perchance you won’t. I’m conscionable looking astatine it overmuch mathematically. A batch of companies are going to discarded a batch of things to these accusation centers. We’re going to build a batch of capacity, and perchance astatine immoderate constituent we will personification built tin aliases not tin aliases point will happen, but that will recreation to an end. Then a institution for illustration yours is saying, “Well, we’ve had this title of maturation and now perchance it’s plateaued aliases perchance it’s going down.” How are you reasoning astir that?

I deliberation astir it for illustration this: Don’t confuse compute capacity pinch nan network. The web is ever nan afterthought to each of this, right? It’s, “Oh my gosh, I do really petition to nexus these accusation centers.” So what’s nan level of their thought process? It’s, “I petition nan compute. I petition nan power. I petition nan space.” Those are nan things that are driving their decision. Then by nan way, “Oh my gosh, I petition to nexus these accusation centers correct now.” I’m being flippant, but it is down there. I’d for illustration to show you it was correct up there, but it isn’t. In nan reply to this question, I deliberation that’s really a bully thing. We only get location erstwhile they petition it. They’re not building retired these tremendous capacities because we spot it. We’re putting capacity retired there, and they’re putting postulation down it.

So I return existent comfortableness from that, having lived done 2002 and 2003 erstwhile our revenues went down from point for illustration $1.6 cardinal to astir $300 cardinal successful 1 year. I’ve still sewage nan scars from that, truthful I’m peculiarly delicate to this. This is not nan aforesaid dynamic. They are really putting capacity out, and arsenic accelerated arsenic we put it retired there, postulation is coming done it. To your constituent and to what a batch of different folks are saying, is it going to get overheated successful position of nan GPU worldly and nan accusation centers and nan remainder of it? In my individual opinion? Absolutely. Will location beryllium a spot of a tail disconnected successful each of that? Absolutely. Will it return longer for applications successful nan AI world to genuinely make nan economics? Absolutely. But we’re not banking connected that. We’re conscionable seeing this bully dependable maturation successful bandwidth, which I deliberation will pervade throughout.

Here’s different measurement of answering your question. Over nan past 2 decades, bandwidth has grown astir 20, 30 percent a twelvemonth and is not cyclical. When you deliberation astir it, it shouldn’t beryllium cyclical, should it? We’re conscionable putting overmuch and overmuch applications out, we’re utilizing our phones for overmuch stuff, overmuch group are getting phones, and each these devices are now connected. That has been very dependable and accordant throughout. Even erstwhile you get an economical downturn, it continues astatine astir that pace. What we’re talking astir coming is nan advent of AI connected apical of that. Exactly what is it going to be? No 1 really knows. There’s each these models, but nary 1 really knows. But it’s reasonable to presume that it’s going to recreation connected apical of that and could push america to 30, 40 percent bandwidth maturation per year, and I deliberation that’s going to beryllium beautiful sustainable. When you deliberation astir each nan committedness of AI, nan existent instrumentality to it is you commencement putting immoderate graphics down it.

Every clip you comprehend [Google CEO] Sundar Pichai opportunity multi-modal AI, I tin spot nan dollar signs floating done nan offices complete there.

I emotion it. We’re fundamentally readying our business connected what we see, and we’ve taken our maturation rates up. Typically, this business has grown. We’ve grown astir 7 aliases 8 percent. We’re now saying it’s going to move 8 to 11 percent complete nan adjacent 3 years, and that’s without immoderate monolithic preamble into nan accusation halfway abstraction aliases point else. It’s conscionable what we spot from a unreality maturation constituent of view.

You’ve talked a batch astir entering nan accusation halfway utilizing nan aforesaid halfway exertion that you usage for nan undersea cables and nan telecom providers. What are nan barriers to doing that and what were nan things you assessed erstwhile you thought, “Okay. This is nan marketplace we personification to address”?

The barriers to preamble location are that you’ve sewage a exertion called direct-connect, which has been bully ensconced location really since nan commencement of relationship successful accusation centers. You’ve sewage an ecosystem location that is going to beryllium designed to elongate that for arsenic agelong arsenic possible, and nan customers want to support it for arsenic agelong arsenic possible. With nan analytics we’ve done connected it and moving pinch them, they deliberation that there’s going to beryllium an intersection constituent wherever nan physics of that gets to nan constituent wherever it’s not sustainable. We deliberation we’ve sewage to nan constituent pinch powerfulness and abstraction wherever there’s a bully intersection. So it’s nan analytics astir that and moving pinch 2 aliases 3 of these players who are already our customers but extracurricular nan accusation center.

Is that them coming to you aliases are you going to them?

A mini spot of both. We personification beardown relationships pinch them, truthful that collaboration has been there. We’re realistic astir it. The existing measurement of moving and that direct-connect? That’s not going away. That’s astir apt still nan mostly of applications for it. So you’re looking astatine what nan subset of corner-case applications are for this benignant of high-speed connectivity. But moreover a mini information of that is monolithic for america and monolithic from a modular constituent of position fixed nan magnitude of locomotion that’s gone connected successful that space. It’s ever astir taking risks erstwhile that marketplace isn’t location correct now, but if you clasp until that marketplace appears, it’s excessively late. If you’re waiting for, “Oh, what’s nan marketplace banal of this and what’s nan maturation rate?” At nan extremity of nan day, you’ve conscionable sewage to spell pinch what your intuition is and what you’re proceeding and seeing from nan customers and nan rest.

So we’ve sewage our first loop of exertion for this coming retired astatine nan extremity of nan year. That’s a liking that we placed two, 3 years ago. As you know, nan timing takes a while pinch immoderate of these spot designs and stuff. You personification to conjecture wherever nan market’s going to go, not wherever it is correct now. There’s ever an constituent of consequence to it. Listen, having gone done immoderate of this before, you’re ne'er going to get it wholly right. You conscionable personification to beryllium successful nan correct vector, net attention, and tweak connected nan measurement astir it. So we’re listening intently.

Gary, this was an unthinkable conversation. You’re going to personification to recreation backmost sometime. I could talk to you astir this for hours and hours.

Love to. I enjoyed it, Nilay. Good questions. Good stuff. 

We’ll see. We should personification you backmost a mates of years from now and spot really stressed you are astir these undersea cables. I deliberation that would beryllium very interesting.

We’re surely successful for immoderate entertainment, aren’t we?

I cognize what we’re penning astir for nan adjacent 4 years. Gary, this is amazing. Thank you truthful much.