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To: Johnny Canuck who wrote (35233)	11/23/2001 12:05:05 AM
From: Johnny Canuck	Read Replies (1) \| Respond to of 68678

ONIS losing market share: For the third quarter, the entire metro DWDM market declined about 25 percent, according to Dell'Oro. This is the first decline ever for this market. And the future doesn’t look much better. This year, the entire DWDM metro market is estimated to be $676 million, which includes actual numbers from the last three quarters and an estimate for the fourth quarter of 2001. In 2002, Dell'Oro expects the market to grow only about $12 million to $688 million. [Harry: This might explain why ONIS said they were planning for a burn rate to have enough cash to survive 4 years. They don't think this going to be a short term problem.] . . . Analysts and carriers see things a little differently. They applaud ONI for its technological prowess, but note that the product's real issue may be the price tag. During the past quarter, the cost game has played out in Nortel’s favor, particularly in Asia, where carriers are much more cost conscious than their North American counterparts. "Where we’ve seen Nortel succeed is overseas,” says CIBC's Schafer. “They don’t have the same feature set as ONI, but sometimes the Asian carriers don’t need all that functionality." [Harry: Interesting as ONIS said they were not seeing any unusual pricing pressure and actually walked away from two deals to only be called back.] . . . Also hurting ONI is the fact that the company still doesn’t have its Osmine certification. This is important for companies selling to RBOCs. ONI officials placed new emphasis on the Osmine process in the last quarter's conference cakk, saying they would spend significant resources on it (see ONI Stock Takes a Hit ). The company is also focusing on diversifying its customer. The company has depended largely on sales to competitive local exchange carriers (CLECs), which make up almost 50 percent of its total customer base. [Harry: One of their products will be OSMINE certified by the end of December.] . . Ciena could also run into trouble down the road as it tries to increase market share, because it hasn’t certified its metro product with Osmine either. Nortel, on the other hand, announced last month that it has finished its Osmine certification, something the company says helped it land a deal as the primary provider of DWDM technology for SBC Communications Inc. (NYSE: SBC - message board) under a multiyear metro optical contract. [Harry: Point to keep in mind is that OSMINE for one carrier is not the same as OSMINE for another carrier according to ONIS CC.] Message 16692909