A Gateway To 'Convergence' Nortel Product May Boost Value Of Data Networks
Date: 7/8/99
Author: Michele Hostetler
Nortel Networks Corp. wants to make networks smarter.
On Wednesday, it revealed a new unit and said the unit next month will release its first product, which will look to boost the IQ of Internet-type networks. This promises to be a hot market, analysts say.
The product is called a subscriber service gateway. It's basically a box filled with circuitry and software that will let network managers tell one customer from another. With such a gateway, phone carriers and Internet service providers can more easily sell premium services to corporate customers willing to pay premium prices.
Such gateways have only hit the market in the past year. Nortel is the first big player with such an offering. The Canadian company is getting the jump on such rivals as San Jose, Calif.-based Cisco Systems Inc.
Nortel's new division is an outgrowth of its $340 million April purchase of privately held Shasta Networks Inc. Shasta was based in Sunnyvale, near Cisco. It's also near the former Bay Networks Inc., which Nortel bought last year with an eye toward the voice and data network convergence.
''It is important for people in Silicon Valley to understand that Nortel is a player,'' said Anthony Alles, president of Nortel's new Shasta IP Services Business Unit. ''We are here to stay and we are here to win.''
Alles had been Shasta's chief executive.
Besides Cisco, Nortel-Shasta competes against a host of start-ups, including Redback Networks Inc. Redback, which went public in May, released competing products last year.
The gateway is important because data networks haven't had the capability to offer special services that in the voice field can be found by such standard offerings as call waiting.
Companies that run data networks, Alles says, want to ''sell services, not bits.''
The subscriber service gateway is designed to let phone carriers and Internet service providers watch and shape traffic on their networks. The carriers or ISPs then can offer encryption and other options that they see their corporate customer needs, says William Flanagan, an analyst with NetReference Inc., a Sterling, Va.-based consulting firm.
Traditionally, ISPs have used routers - a Cisco stronghold - to offer basic services, says Rosemary Cochran, an analyst with Boston-based Vertical Systems Group. Routers direct traffic.
But now users are demanding different levels of service. Some users want priority when, for example, they need to quickly send a voice- and video-heavy presentation to a colleague on the other side of the world. Routers alone can't do this well, Cochran says.
Carriers and ISPs can sort out their network traffic using these gateways, Flanagan says, and make more money from the networks. ''You can slice this baloney real thin,'' he said.
The market is in its beginning stages as carriers move away from traditional voice -circuit- based - networks to data - packet-based - ones. Data networks break up traffic into uniform packets for fast transmission, but technology still has a way to go before data and voice networks fully converge.
''(The new gateways) probably are more flexible and powerful than any phone company will be able to take advantage of for a long time,'' Flanagan said.
Still, analysts expect more companies will enter this field. Cisco already offers some of these services through existing products, though it has nothing that directly competes with Nortel's upcoming offering, Cochran says.
Nortel is in a good position, Flanagan says.
''They did their homework,'' he said. ''They know what the phone companies need.''
(C) Copyright 1999 Investors Business Daily, Inc.
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I thought this article further expands on your NT musings.
I look forward to your next tome.<g>
regards,
dkg |
