Cerent Corporation

Cerent Corporation was an optical telecommunications equipment company based in Petaluma, California. It originated in 1997 as Fiberlane Communications, a startup backed by Kleiner Perkins Caufield & Byers, with Vinod Khosla serving as the principal venture-capital sponsor. The original organization was divided among three technical and operational centers: a systems group in Petaluma, a chip-design operation in Mountain View, California, and a network-management-systems group in Burnaby, British Columbia. In early 1998, the organization was separated into two companies. The Petaluma systems operation became Cerent Corporation, while the Mountain View chip-design and Burnaby network-management operations became Siara Systems. Siara was later acquired by Redback Networks in 1999. Cerent therefore developed as a focused optical transport systems company rather than as a broad telecommunications conglomerate. Cerent's principal product was the Cerent 454, a second-generation SONET add-drop multiplexer designed to combine traditional carrier transport functions with packet-oriented data switching. In its initial role as a SONET ADM, the platform could add and drop circuits across a range extending from OC-192 to DS1. Later versions also supported wavelength-division multiplexing. Its architecture allowed carriers to install data cards that terminated circuits and switched or routed TCP/IP traffic within the same chassis. This reduced the need to deploy separate transport and routing boxes for some network functions. The Cerent 454 was differentiated by its compact form factor, relatively high port density, integrated chip design, and lower power requirements compared with competing systems of the period. It also used TCP/IP and a web server for management, allowing operators to administer the network element through a standard IP network. This was an unconventional choice in carrier networking at the time, when OSI-based management environments remained common. The company supported the choice partly because its embedded operating-system environment already included a TCP/IP stack and because developing and maintaining a separate OSI stack and management network would have imposed substantial costs on a young company. Mike Hatfield became chief executive officer after replacing Raj Singh in that role. Cerent's growth culminated in its acquisition by Cisco Systems in August 1999 for a reported $7.2 billion. Following the transaction, the Cerent 454 was rebranded as the Cisco 15454 and became the foundation of Cisco's Optical Transport Business Unit. Cisco reported that the product reached a $1 billion annual sales rate faster than any product in the company's history at that time, including approximately $250 million in sales during its second quarter as a Cisco business unit. Cerent ceased to operate as an independent company after the acquisition, but its product architecture and engineering work became an important part of Cisco's optical transport portfolio.

Cerent's history began in 1997, when Fiberlane Communications was established as a venture-backed telecommunications technology company. Kleiner Perkins Caufield & Byers provided funding, with Vinod Khosla acting as the managing venture-capital sponsor. The company was organized around three geographically distinct activities. Its Petaluma, California, division worked on systems, the Mountain View division focused on chip design, and a Burnaby, British Columbia, division developed network-management systems. The organization was restructured in early 1998. The Petaluma systems business became Cerent Corporation, while the Mountain View and Burnaby operations were combined under the Siara Systems name. This separation left Cerent focused on carrier-grade optical transport equipment. The founding team associated with the company included Raj Singh, Jay Sethuram, Ajaib Bhadare, and Paul Elliott. Other early contributors included Mike Hatfield, Tom Corker, Chip Roberson, David Scott, Mike Iriarte, Anu Nigam, Alnoor Shivji, and Sigfried Luft. The early board included Raj Singh, Vinod Nair, and Don Green. Mike Hatfield subsequently became chief executive officer, replacing Raj Singh. Cerent's central technical achievement was the Cerent 454, a second-generation SONET add-drop multiplexer with integrated packet-switching capabilities. Conventional carrier networks often used separate equipment for optical transport and IP routing. The 454 allowed data cards to terminate circuits and route or switch TCP/IP traffic inside the transport chassis. In addition to supporting circuit add-and-drop functions from high-capacity OC-192 services down to DS1, the platform later incorporated wavelength-division multiplexing capabilities. The system was designed to appeal to carriers seeking greater density and simpler network architecture. Its stated advantages included a smaller physical footprint, higher port density, more integrated chip implementation, and lower power consumption than contemporary alternatives. Cerent also adopted IP-based management and included a web server in the network element. Although this diverged from the OSI-oriented management practices common in carrier networks at the time, the approach was practical for a startup because the embedded operating-system environment already supplied TCP/IP functionality. Avoiding the cost of acquiring and supporting an OSI stack was another consideration. Cisco Systems acquired Cerent in August 1999 for a reported $7.2 billion. The company no longer operated independently after the transaction. Cisco renamed the Cerent 454 as the Cisco 15454 and used Cerent's technology as the foundation of its Optical Transport Business Unit. The platform achieved rapid commercial scale inside Cisco, reportedly reaching a $1 billion annual sales rate faster than any previous Cisco product at that time and generating $250 million in its second quarter as a Cisco business unit. Cerent's corporate identity consequently disappeared into Cisco, while its product and engineering legacy continued within Cisco's optical networking business. Separately, Redback Networks acquired Siara Systems in November 1999 for a reported $4.3 billion.

• 1999

  Cisco acquired Cerent

  [1]Cerent Corporationen.wikipedia.org

  Cisco Systems acquired Cerent, bringing its optical transport technology into Cisco's portfolio.

• 1999

  The Cerent 454 became the Cisco 15454

  [1]Cerent Corporationen.wikipedia.org

  Cisco rebranded Cerent's flagship optical transport platform and used it as the foundation of its Optical Transport Business Unit.

• 1998

  Fiberlane was divided into Cerent and Siara Systems

  [1]Cerent Corporationen.wikipedia.org

  The Petaluma systems division became Cerent, while the Mountain View chip-design and Burnaby network-management activities became Siara Systems.

• 1997

  Fiberlane Communications was founded

  [1]Cerent Corporationen.wikipedia.org

  The venture-backed company that preceded Cerent was established with support from Kleiner Perkins Caufield & Byers and Vinod Khosla.

Cerent positioned its equipment as a compact, integrated optical transport platform for telecommunications carriers. Its key proposition was the combination of SONET circuit transport and TCP/IP packet switching in one network element, reducing equipment duplication and enabling more direct management through IP-based tools.

• Optical transport platform

  Cerent 454

  The Cerent 454 was a second-generation SONET add-drop multiplexer designed for carrier networks. It could add and drop circuits ranging from OC-192 to DS1 and later supported wavelength-division multiplexing. Its distinctive feature was the ability to use data cards to terminate circuits and switch or route TCP/IP traffic within the same chassis, combining transport and packet-network functions. The platform emphasized compact construction, high port density, integrated electronics, lower power consumption, and IP-based management through a TCP/IP network and web interface. Cisco renamed it the Cisco 15454 after acquiring Cerent.

• 1999

  Cisco acquired CerentM&A

  Background

  Cerent had developed a commercially significant optical transport platform combining SONET and packet-switching functions.

  Action taken

  Cisco Systems acquired Cerent in August 1999 and integrated the company into its optical networking activities.

  Aftermath

  Cerent ceased to operate as an independent company. The Cerent 454 was renamed the Cisco 15454 and became the foundation of Cisco's Optical Transport Business Unit.

  Reported acquisition value. $7.2 billion (August 1999)

  Source

• 1998

  Separate the Petaluma systems business from the other Fiberlane operationsStrategy

  Background

  Fiberlane's original structure combined systems, chip design, and network-management activities across three locations.

  Action taken

  The Petaluma systems division was established as Cerent, while the Mountain View and Burnaby operations became Siara Systems.

  Aftermath

  Cerent concentrated on optical transport systems, while Siara pursued chip-design and network-management activities until its later acquisition by Redback Networks.

  Source

• 1999

  Cisco agreed to acquire Cerent Corporation[1]Cerent Corporationen.wikipedia.org

  M&A

  Cisco Systems agreed to acquire Cerent in August 1999. The transaction brought Cerent's optical transport technology into Cisco and established the basis for Cisco's Optical Transport Business Unit.

• 1999

  Cerent 454 became the Cisco 15454[1]Cerent Corporationen.wikipedia.org

  Product generation · Product launch

  After the acquisition, Cisco rebranded Cerent's principal platform as the Cisco 15454. The product rapidly became a major Cisco optical transport offering.

• 1998

  Siara Systems was separated from the original Fiberlane organization[1]Cerent Corporationen.wikipedia.org

  Other

  The original Fiberlane Communications organization was divided, with the Petaluma systems business becoming Cerent and the Mountain View and Burnaby operations becoming Siara Systems.

1. 1Cerent Corporationen.wikipedia.org