Viavi Solutions to aid network evolution, monetization

Viavi Solutions (NASDAQ:VIAV), the new name for what remained of JDSU after the Communications and Commercial Optical Products (CCOP) group spun out as Lumentum Holdings Inc. (NASDAQ:LITE) on August 1, is uniquely positioned to help network operators across the board not only enable and manage the transition to software-defined networking (SDN) and network functions virtualization (NFV) but to find new opportunities for monetization, according to the company's president and CEO, Thomas Waechter.

Viavi Solutions (NASDAQ:VIAV), the new name for what remained of JDSU after the Communications and Commercial Optical Products (CCOP) group spun out as Lumentum Holdings Inc. (NASDAQ:LITE) on August 1, is uniquely positioned to help network operators across the board not only enable and manage the transition to software-defined networking (SDN) and network functions virtualization (NFV) but to find new opportunities for monetization, according to the company's president and CEO, Thomas Waechter.

Viavi comprises JDSU's network and service enablement (NSE) operations as well as its Optical Security and Performance (OSP) business lines. The company, whose stock began trading on NASDAQ today, has already begun to transition its NSE efforts to more software-centric offerings in light of the growing interest in SDN and NFV, Waechter said in an interview last week. This includes a series of company acquisitions over the past few years to bring more software skills in-house.

The moves position the company to help operators improve the efficiency of their networks. "What we're seeing is the desire by the operators and those that operate the cloud and enterprises to be able to capture a lot of the Big Data that's going across the network, to really be able to analyze it to do a bunch of things," he explained. "One is to optimize their networks so they get better performance, be more efficient with their operating expenses and their capital expenditures so they can get more efficiency out of the network, bring up quality of service for their end customers and reduce churn."

Viavi also will be in position to expand into new areas. "Eventually I think the next step to that is they'll be able to take that data and do more monetization of it," Waechter said. "Can they monetize that information and that data that's being collected as far as what kinds of devices are being used, what apps are being run, where the heavy flow is of the traffic from a mobile standpoint? We're going to help them also monetize that data eventually."

All of these activities fall under what Waechter considers service enablement. This business complements the company's work in network enablement, which includes network installation and troubleshooting, as well as Viavi's lab and manufacturing test and measurement instrumentation.

"I think over time, as we look over the next year, year and a half, we expect the service enablement part to grow faster," Waechter predicted. "We think the growth rates can be 20% to 30% type of CAGR on that part. I think in the more traditional network enablement part, that's going to be a fairly flat market."

Which doesn't mean there aren't opportunities in network enablement. For example, JDSU had stayed on the sidelines as Agilent, EXFO, and Tektronix leveraged their oscilloscope portfolios to capture most of the business around line-side coherent transmission technology development. Complex modulation formats such as PAM4 are now emerging on the client side, as Waechter has noted.

"I think that is a market where we have growth potential," he said. "I don't think it would be the largest part of our revenue. But I think it's an area that has potential growth, especially as you're getting into the more complex 100 and 400 gig. We definitely have that type of expertise internally to be able to support the customer space."

Waechter also sees the enterprise and data center space as an opportunity, leveraging the assets JDSU acquired with Network Instruments in 2013 (see "JDSU to expand enterprise/data center test play with Network Instruments acquisition").

The combined network and service enablement expertise sets up Viavi for success going forward, Waechter believes.

"Our whole progress around network and service enablement is to provide end-to-end solutions so [customers] can go to one supplier that can help them install the network, help them get the network up and running, to optimize it, and then to monetize the data coming across that network," he said. "As Viavi, we believe we're the only supplier out there that can really do that full end-to-end solution. We have competitors that do parts of that. But we really provide the end-to-end."

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