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Nortel Pins Hopes On New IP Routers

Charlene O’Hanlon, Computer Reseller News
San Francisco

Nortel Has Made Its IP Pitch, But Routers Still Have A Lot Of Life Left

Nortel Networks Corp.'s pronouncement that "old world" routing is dead with the introduction of its new Open IP Environment software can be compared to Christopher Columbus setting ground in the New World and pronouncing he had landed in India: a little misdirected, but a good effort nonetheless.

But does Nortel's announcement and its strategic partnerships, both revealed in November, really signal a sea change in the router space? While most industry pundits agree this is a significant development in router technology, they also are quick to point out that the sky is not falling on traditional routers,at least not yet.

"To their credit, I give [Nortel] a thumbs-up for their timing and marketing [of the Open IP Environment software]," said Laurie Gooding, senior WAN analyst, Voice and Data Communications Group at In-Stat Group, Scottsdale, Ariz. "However, most would agree this is mostly marketing," she said.

Nortel's announcement regarding its new Open IP Environment software promised a shift from "expensive and complex 'old world' router hardware to low-cost 'new world' routing and IP software," according to a company statement. Brampton, Ontario-based Nortel also reported it had signed up 75 customers to incorporate the Open IP Environment into their products, including Intel Corp., Santa Clara, Calif., and Microsoft Corp., Redmond, Wash. Nortel also cut prices of its access routers by up to 50 percent.

Nortel's Open IP Environment is routing and IP software that can Internet-enable a number of devices including servers, personal computers, mass-market appliances, mobile devices, set-top boxes and processors.

"Nortel is trying to achieve a shift of the paradigm from a proprietary enclosed infrastructure to an open infrastructure," said Kalai Kalaichelvan, general manager of Open IP Environment at Nortel. Based on modular software architecture, the Open IP Environment software uses standard and APIs to perform IP functions such as routing, authentication, security, encapsulation and tunneling, and IP applications such as policy and network management.

Nortel's move poses a threat to low-end routers and is a way to rapidly commoditize the market, said Hilary Mine, executive vice president of Probe Research, a Cedar Knoll, N.J.-based consulting firm.

Both Mine and Gooding agree that the Open IP Environment is a way for Nortel to stay in the router game,making an end run around router giant Cisco Systems Inc., San Jose, Calif.

"This was purely a competitive move for Nortel. Rather than go head-to-head with Cisco, they said, 'Let's change the market,' " Mine said.
"It ruffles their feathers that Cisco has been [taking leadership in the traditional router space]," said Gooding. "Nortel knows it has no hope of taking the No. 1 market share in this space, so it is orchestrating a play off the fact that traditional routers now are slowing down in growth."

According to In-Stat, ATM will continue to play a key role in multiservice core networks for the next five years. But, as dense-wave division multiplexing becomes more economical, optics will move further out and fewer edge routers will be required. As a result, router functionality will be distributed across the network, in both the optical core and in end-user devices, according to In-Stat.

Nortel's announcement will not have a direct affect on router sales through 2000, In-Stat said. It will take manufacturers at least 12 to 18 months to develop suitable router replacements, and longer for optical networks to reach critical mass, according to In-Stat.

And what will become of the routing technology Nortel gained with its acquisition last year of Bay Networks? "It will be there still," Kalaichelvan said. "But the roles of those things will be much broader," he said.

However, Bruce Laird, senior director of marketing for the Remote Internetworking business unit at Cisco, puts an entirely different spin on the Open IP Environment offering. "To me, it looks like Nortel getting out of the router business rather than staying in," he said. Cisco's argument is traditional routers will always have a place in the market due to their relative security, Laird said.

"People have come to realize that communications capabilities are a little too sacred and critical in terms of high availability and guaranteed uptime," Laird said. Cisco currently does not have a strategy to enter the IP router software market, citing low interest and a small customer base for the technology, he said.

But Nortel's Kalaichelvan said the numbers do not lie. "We have 75 customers who are incorporating the Open IP Environment into their products."


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