XO recently announced another upgrade to its ethernet infrastructure, now offering ‘an even wider range of incremental bandwidth options to choose from’. Well, that probably isn’t the reason for their PR. Since it is mentioned more than once, what XO seems to be pre-announcing is the introduction of ethernet VPLS services early next year, as well as classes of service. Only a couple years late, but still they do seem to be catching up.
In case anyone hasn’t noticed, XO has been rolling out all sorts of data infrastructure products, upgrades, and expansions since the year began. Here’s a quick list:
- Enhanced Ethernet Infrastructure 8/18/2008
- Ethernet Hub product 8/4/2008
- Nationwide Ethernet Availability 5/1/2008
- XO Anywhere product 4/14/2008
- IP Services Cisco deployment 2/26/2008
- National IP network upgrade 2/25/2008
- Expansion to Charlotte 2/8/2008
- IP Services expansion 1/16/2008
Against the backdrop of the refinancing of their debt to Icahn, a soap opera if there ever was one, this list is really quite long for a mere 8 months with cash balances so low for most of that time. A few puff pieces about network upgrades are one thing, after a while you have to start taking the expansion seriously. XO is clearly putting money behind its IP network, driving hard to catch up to the rest of the field. It makes sense though, multiple sources put the growth of the IP/Data/Ethernet business market at 20% and that doesn’t include market share gains.
XO still has a large pile of legacy data/voice revenue, but a healthy portfolio of ethernet products may give them a viable upgrade path for that revenue. However, as long as their legacy revenues are such a large percentage of their total, their overall growth rate can’t really pick up that much. They still need scale, and I continue expect they will be bought out by a competitor to solve that problem. Yet their product rollouts continue – is it just lipstick or does Icahn really mean it this time? Well, whatever he’s doing, we can be sure it will be hardball.
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