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On November 5th, Andrew Schmitt and Scott Wilkinson traveled to New York for a day of 1:1 meetings with investors and a lunch presentation to a group of investors. Topics included the role compact modular systems would play in shaping operator spending, Chinese spending and technology trends and discussion of the ongoing industry consolidation.

Raymond James released a note summarizing the discussions – some observations are excerpted here:

Product Price: CignalAI dismisses the Street’s focus on annual 10-15% component price declines. The values cannot be audited and many of the technologies where data is available (e.g., CFP2s) have declined at a more rapid pace.

Compact Modular, not DCI: CignalAI asserts that products associated with the Data Center Interconnect (DCI) market and webscale belong to a broader theme linked to disaggregation. This market represented about $1 billion within the roughly $13 billion market in 2017. Although the DCI market emerged with Infinera’s Cloud Xpress for interconnecting data centers, the competition, applications, and architectures have broadened and Ciena has taken the lead with its Waveserver

Tech Roadmap and Implications for Industry Participants: The emergence of the 400G ZR and ZR+ technology will catalyze deployments. With standardization, the industry hopes to achieve interoperability, which suggests some commoditization, but this also fuels demand. It might be early to predict winners among the component players, but Acacia sounds well positioned.