Nortel Networks Corp.’s latest big purchase is just another step towards the company’s goal of using Internet Protocol (IP) technology for all communication services, according to Dan McLean, an analyst with IDC Canada Ltd. in Toronto.
“There’s not a big mystery to this,” McLean said of Nortel’s $540 million purchase in stock of Marina Del Ray, Calif.-based Sonoma Systems. “It’s yet another piece to that whole solution set that Nortel is building around IP.”
McLean said Nortel’s acquisition of Sonoma, a two-year-old company, will help the Brampton, Ont.-based company prioritize IP-based traffic. Sonoma Systems specializes in integrating high-speed video, data, and voice communications.
“Basically, (Sonoma’s technology) allows a user or a business to give certain quality of service levels to various types of applications,” McLean said. “It’s really just an enabler to doing multiservice across IP. Not just using IP for data, but using it for voice and video as well.”
Quality of service has been an ongoing issue with IP, as the technology inherently treats all traffic the same way. “So if it’s got voice, video and data streaming across it, the scheme that’s usually in place is, ‘whoever gets there first…proceeds along the path,'” McLean said.
For data, which does not suffer too much from latency, that is not a problem. But both voice and video are delay-sensitive, and links can often be lost if that traffic is not given priority. Sonoma’s technology allows telecom carriers to provide customers with a device that will handle voice, video and data traffic at high speeds.
Nortel said it believes its purchase of Sonoma Systems will help to ease the bottleneck created by bandwidth problems at the so-called “last mile” – where Internet connections are made to homes and businesses.
“We are taking our leadership in the high-performance optical Internet and extending it to the local Internet,” said Steve Schilling, president, access networks, Nortel Networks. “This acquisition represents another building block in our local Internet capabilities that will enable service providers to offer new, profitable services directly to businesses and consumers.”
For Nortel, the Sonoma purchase is the company’s twelfth major acquistion in the past year. Just recently, the company spent US$7.2 billion in stock for San Jose, Calif.’s Alteon WebSystems Inc., a content-aware switching manufacturer.
“They’ve been going down this path for a while,” McLean noted. “(Sonoma’s) not the last acquisition piece.”