Gary Smith: Well, I think first of all, you’re dealing with a lot of pent-up demand, orders that have been placed because of extended lead times and carriers — I mean, let me be really clear, carriers and web-scale want the equipment. There’s no doubt about that. They want the equipment. Now I would say, for the first time in the web-scale sort of area, we’re seeing them manage to their budgets. So even though they want all the equipment, they can’t take all of the equipment in the year. And we are seeing that, and that is built into our guide. Even with the massive uptick that we’re seeing in web-scale, that is built into our guide. So they are scheduling stuff out into ’24, which is great because it gives us backlog and visibility there.
We know they want the equipment to complete the networks that they’re driving. So that actually is sort of a positive dynamic, but they are — the web-scale, particularly are managing to their budgets. And we are seeing that have seen that for the last few quarters. On the carrier side of things, again, they’ve got pent-up demand, and they are, as usual, managing to their budgets and CapEx. But I would say that the priority for them is actually in this space and is on capacity to build out their networks, particularly when you think about it, the last two to three years, first of all, they did not during the sort of COVID period — they were operationally conservative and really the growth in the market was pretty flat. Then they had pent-up demand, then we couldn’t ship it to them in time.
And so it is a priority for them right now to roll out these networks. So obviously, they’re not immune to all of the economic uncertainty out there. But given the particular demand dynamics around capacity in their networks we’ve got good visibility to that and not just in the backlog, but in the activity that we’re seeing with them. So that’s how I would characterize the two groups. We are not seeing any push out on the carrier side from a budget point of view. We’re not seeing it.
Paul Silverstein: All right. As a follow-up, the numbers clearly indicate that ZR, at least at present, is not having an adverse impact. And I’m mindful that you guys — I keep — all sides indicate that you’ve got the lowest power solution in the market, which obviously is a critical factor. You’ve now announced WaveLogic 6 on 3 nanometer. I don’t think anyone else has announced 3 nanometer, which presumably would — I recognize it’s not necessarily ZR, but presumably that will continue your trajectory in terms of power efficiency. But let me let you respond. Any update on where your activity is at on your participation, if any, relative to that opportunity?
Scott McFeely: Paul, I don’t think our perspective has changed much since the last time we chatted. I firmly believe we’ve got the best pluggable product in the marketplace, both from you mentioned power and — but also reach. And there’s starting to be some external references to validate that. We still think that market in terms of the ZR market for campus DCI is still very much in front of us. There’s been some early movements. I don’t think they’ve moved into the network as fast as people had expected. But as that sort of inventory position and those customers bleeds off, we think there will be opportunity in front of us.
Paul Silverstein: All right. Jim, can you just clarify something? Any meaningful contribution from Tibit and Benu in the quarter?
James Moylan: No, it was not, Paul. They were a little bit later in the quarter, and there was no meaningful revenue contribution at this stage.
Operator: Our next question comes from Tim Long from Barclays.
