Nortel to partner in enterprise routing

Nortel Networks is looking to re-enter the enterprise router market through a partnership to better compete against Cisco Systems Inc., according to vice-chairman and CEO Bill Owens.

Owens would not say who Nortel is looking to partner with but did acknowledge that enterprise routing is currently a gap in the company’s product portfolio. Curiously, his statements come as Nortel prepares to enter beta trials with two internally developed routers, the Secure Router 6230 and 6280, believed to be those code-named “Dolphin.”

“We don’t have a profoundly important router product,” Owens said during an interview at Supercomm 2005. “We’re aware of that. So you wouldn’t expect us to not be doing anything about that.”

Asked if Nortel would develop a router internally or partner, Owens said: “We are much more of a mind nowadays to partner than we have been at Nortel in the past. If we just had a year to put some time and money and effort, we’d build a better one. But I don’t think that’s where we’re at now. We’re very much in the mode of saying, ‘The future is built on solution sets, applications, complete turnkey operations, and it’s unlikely that anyone by themselves is going to be the answer to that.’ So there are a lot of opportunities to partner.”

A Nortel spokesman would not confirm the brand names for Dolphin but he said it and another router code-named “Triton” are still under development, and Nortel plans to ship Dolphin by the end of this year. Nortel users say they will beta test Dolphin in July and Nortel plans to make it generally available in September.

Nortel officials also say the company’s delayed MPE 9000 multiservice edge router for carriers can also be deployed as a core router in large enterprises. And the company continues to offer its VPN Router line, formerly known as Contivity, which Nortel says provides IPsec and SSL VPN, firewall, bandwidth management, encryption, authentication and data integrity. “I have not heard about the new router line from my Nortel account team,” says Sheng Guo, CTO for the New York State Unified Court System. “We use their Contivity security switch as routers in many locations. Maybe I should check the new stuff out.”

The Nortel spokesman says the partnership would be for a more general-purpose router without all of the security “bell and whistles” of Dolphin and Triton. It is unclear which vendor Nortel plans to partner with, but a number of candidates come to mind:

• Huawei, a staunch competitor of Cisco’s based on cost, which has partnerships already with 3Com and Siemens.

• Juniper, which is looking to accelerate sales of its recently announced J-Series branch office devices.

• Adtran, whose NetVanta access routers consistently undercut Cisco’s premium pricing.

• NetDevices, a Silicon Valley start-up that analysts say makes devices similar to Cisco’s heralded Integrated Services Routers. Adtran says there are no current plans to partner with Nortel. “The ball’s in Nortel’s court,” a company spokeswoman said.

Juniper declined to comment on “rumours.” Huawei and NetDevices did not comment by press time.

Nortel has had less than stellar results in enterprise routing since acquiring Bay Networks in 1998. According to Synergy Research Group, Nortel’s total router revenue dropped to US$8.6 million in the first quarter of 2005 from US$38 million in the second quarter of 2002, 22 per cent between 2003 and 2004 and 55 per cent in the first quarter of 2005.

Nortel’s share of the US$1.8 billion total worldwide router market in the first quarter was 0.5 per cent, putting it well behind Cisco and Juniper. “The enterprise router market is a tough market to compete in,” says Zeus Kerravala, an analyst at The Yankee Group. “Cisco’s so dominant there” with 86 per cent share of the low-end, 93 per cent of the branch office and mid-range, and 65 per cent of the high-end, according to Synergy.

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Related links:

Ciena and Nortel just can’t seem to get along

Nortel moves on security

IBM, Nortel to team up

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