Article of interest from CNET - routing code in network appliances reduces need for bandwidth
Nortel takes new road against rival in
router market
By Wylie Wong
Staff Writer, CNET News.com
October 9, 2000, 4:00 a.m. PT
Nortel Networks is hoping to chip away at Cisco Systems' dominance in
networking with the help of Intel, Microsoft, Motorola and hundreds of other
technology companies.
While young companies like Juniper Networks are gunning after Cisco directly
and making some headway in the high-end router market, Nortel has taken a
different--and as yet unproven--tack by attacking Cisco on the low end of the
market.
Routers are devices that allow telecommunications carriers, Internet service
providers and corporations to send Net traffic from point to point along a network
at fast speeds. Cisco owns the lion's share of the router market, with about 75
percent.
To combat Cisco, Nortel wants to move the routing of information away from the back-end infrastructure, where
high-end routers reside, and closer to consumers by embedding software in computers, cell phones, Palm handhelds
and any electronic device that connects to the Net.
While Cisco keeps the routing software used in its networking devices in-house,
Nortel for the past year has licensed its routing software code to 200 technology
companies, including Microsoft, which built the routing features into the Windows
2000 operating system, and Intel and Motorola, which build chips for
communications devices.
Analysts say Nortel's strategy is smart, but it may take years to determine its success
or failure.
"It's a terrific strategy, but Nortel really didn't have much choice," said analyst Dave
Passmore of The Burton Group. "They're not under any illusions that this will
displace (Cisco's routing software code), but it allows them to more effectively
compete."
Nortel's attempts to compete head-to-head against Cisco in the
router market have failed, despite gaining some routing
technology from its acquisition of Bay Networks. Nortel recently
had to strike a deal with Juniper to sell the emerging company's
high-end router for service providers after suffering delays in
building its own product.
Cisco captured 75 percent of the $505 million high-end router
market in the second quarter of 2000, followed by Juniper with
22 percent, according to market research firm Dell'Oro Group.
Nortel had 0.3 percent.
In the rest of the router market, which totaled $1.79 billion in
the second quarter of 2000, Cisco also led the pack with 91
percent, followed by Nortel with 3 percent, according to
Dell'Oro Group.
So far, Nortel's 11-month-old routing software licensing effort
has yet to make a dent in Cisco's overall router market share,
said Dataquest analyst Tim Smith. "Cisco's router market
continues to grow, so it has not made any meaningful
differences in how routed networks are put together."
Bill Conner, Nortel's president of enterprise solutions, said the company is making more than $100 million in revenue
from licensing its routing software to 200 companies. But the goal is to change the way networks are built, not to create
a huge revenue generator for the company, he said.
With routers becoming a commodity under Nortel's vision, the company can try to
capture revenue from selling other networking equipment, including high-speed
optical gear, he said.
"Nortel will hopefully get the lion's share of the network themselves," he said.
Conner said having routing features in a cell phone, for example, will speed up
networks by reducing bandwidth use. For a feature such as caller ID to work, cell
phones check phone numbers in a database at the phone company's computer
system. In Nortel's vision of the world, that routing can be done in the cell phone's
processor, he said.
"It wouldn't have to go all the way back carrying data over a wireless network,
chewing up bandwidth," Conner said. "You don't have to go through a network to
look up this or that. You do it on the device, and therefore you have cheaper
bandwidth costs and applications work much faster."
Conner--who a year ago declared the router market "dead"--believes Nortel's strategy
will show momentum in the next few years, especially as more Web-enabled products
with Nortel's routing software begin shipping.
Dataquest's Smith said Nortel's vision still has potential, but he doesn't believe that will displace the current use of
routers. "The idea of routing functions finding its way into more and more handheld devices is a trend that will come
true, but that does not necessarily have a predatory effect on the existing router market. It's an 'add to' kind of market."
news.cnet.com:80/news/0-1004-200-3121255.html |
