Arris expects to grow by increasing market share, based both on new technology developed in-house and on acquired technologies, the company told investors today.
Arris recently said it was buying the Wi-Fi assets of the former Ruckus Wireless, which are now owned by Brocade, as well as the ICX product line of campus switches from Brocade. (These assets will be purchased from Broadcom, which is in the process of buying Brocade).
RBC Capital Markets attended the Arris investor event, and said in a research note that Arris expects that industry spending on new technologies isn’t going to kick in for a quarter or two, however first quarter is likely to be a bit of a trough.
“On a positive note,” RBC analyst Mitch Steves wrote, “the expected annual revenue growth rate (including Ruckus/ICX) should represent a 4 percent CAGR through 2019. This is driven by mid-high single digit growth from N&C/Ruckus/ICX offset by flattish trends in CPE leading to a positive operating margin mix shift.”
For most of its history, Arris catered specifically to cable companies. Its provenance is mostly wireline access networks, and that shows in the new technology the company expects to be supplying. It told investors the technologies that will be the key drivers behind stability in the company’s business outlook include DOCSIS 3.1 for cable, G.fast for DSL networks, NGPON, extending fiber to the node or to the home, and the company’s E6000 Gen2 edge router.
These technologies will also include products mostly for the home, particularly equipment that can support 4K video and virtual reality and products for 802.11ac/ax Wi-Fi networking.
Arris and SDN
Arris does not talk much about software-defined anything, but that has more to do with its customers’ preferences. The cable industry is still delivering most of its TV in a native video format; it’s not IP – although a transition to IP video has been initiated. For broadband, cable has DOCSIS, a self-developed standard for IP delivery.
One of the consequences of being successful with non-IP video and with DOCSIS is that cable ended up isolated from many of the recent innovations in software defined networking (SDN) that the rest of the communications industry is pursuing.
Cable companies are fully aware of the benefits of SDN and network function virtualization (NFV), and many do intend to take advantage of those benefits — eventually. The marquee purpose of DOCSIS 3.1 is to secure more bandwidth to offer more services, but the cable industry deliberately designed this latest iteration of the DOCSIS standard to help those cable companies who elect to do so to gradually re-architect their networks in such a manner that they can make better use of SDN/NFV techniques and tools common to the industry at large.
Arris’ E6000 is a key element in DOCSIS distribution. The company’s roadmap for the capabilities it expects to deliver through its edge routers include DOCSIS 31. Gigabit services and 10G EPON this year, full duplex DOCSIS next year, and virtualization in 2019, enabling better scalability and feature velocity, according to the company’s investor presentation.