(Comtex 11/09 10:10:03)
B: Alcatel Enters High-End Router Arena
New York, Nov 09, 2000 (123Jump via COMTEX) -- French telecom equipment maker
Alcatel (ALA) yesterday announced the introduction of the Alcatel 7770 Routing
Core Platform (RCP) and the 7420 Edge Services Router. Both devices are based on
network processor technology and are targeted to the high-end router market. The
first device is a high-end router that will sit on the core part of the network,
through which most of the Internet data passes. The second is a routing device
that will sit at the intersection of Internet service providers' (ISPs')
networks. (Routers allow telecommunications carriers, ISPs and corporations to
send Net traffic from point to point along a network at high speeds.) The
introduction of these routing devices, likely to be shipped by next May, is seen
as Alcatel's attempt to build on its position as a provider of carrier-class
networking solutions. More important, Alcatel has attempted a strong foray into
the high-end router market hitherto dominated by just two main players - Cisco
Systems (CSCO), which holds the lion's share of the market, and Juniper Networks
(JNPR). Between them, these two companies have cornered more than 95% of a
market that research firm RHK says will have sales of $2.1 billion by the end of
2000 and is projected to grow to around $12 billion by 2003. According to the
Dell'Oro Group, Cisco enjoyed a 75% share of the $505 million high-end router
market in the second quarter of 2000, followed by Juniper with 22%. Nortel
Networks (NT) had 0.3% of this market, and the remaining was occupied by new
entrants in the sector - Avici Systems, Lucent Technologies (LU), Foundry
Networks and Marconi. A few new upstarts - like Ironbridge Networks, Pluris and
Charlotte's Web Networks - are also trying to take a bite of this highly
lucrative market. Interestingly, Nortel reversed its plans to ship its own
product and decided to sell Juniper's products instead. In fact, it was reported
recently that, while attempting to chip away at Cisco's monopoly in the
networking arena, Nortel has taken a new (and as yet unproven) route in the
router market. With the help of Intel Corporation (INTC), Microsoft (MSFT),
Motorola (MOT) and hundreds of other technology companies, 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.
Although it seems a smart move, it may be years before this strategy is proved
to be successful, say analysts. Alcatel, however, obviously is gunning after
Cisco in a more straightforward manner, like all the other small players in the
market. The seeds of this current foray into the high-end router market were
sown two years ago when Alcatel began a buying spree, spending around $7 billion
to buy five U.S.-based networking companies in its quest to make inroads into
the lucrative North American market. Alcatel's buying spree culminated in
February with the acquisition of struggling Canadian networking firm Newbridge
Networks in a deal worth $7.1 billion. At the time of the acquisition, Newbridge
was developing a set of high-end Internet-based equipment that combined voice
and data traffic - a technology Alcatel did not possess. Newbridge was also a
leader in asynchronous transfer mode (ATM) technology, which sends voice and
data signals over networks at high speeds. The acquisition at that time was seen
to be significant, as it would allow Alcatel to better compete against Cisco
Systems, Nortel Networks and Lucent Technologies by enabling it to offer a wider
array of networking equipment to carriers and ISPs. The new routing devices are
reportedly based partly on the technology acquired from Newbridge. Alcatel
claims that its 7770 (RCP), a multi-terabit IP core router, has been engineered
to meet the most stringent carrier-class requirements and enables service
providers to deliver differentiated IP services by guaranteeing network
performance. According to the company's press release, Dominique Delisle, France
Telecom R&D IP program director, said that the higher-end router is currently
being tested by France Telecom. "France Telecom R&D is particularly interested
in being involved in the definition of the specification of the equipment for
the next generation networks at the earliest possible stage. France Telecom is
involved for this reason in Alcatel's 7770 RCP partnership program," said
Delisle, adding, "The 7770 provides high performance terabit routing and
integration with optical transport which will be an essential requirement in the
heart of next generation networks. The Alcatel 7770 RCP has been delivered to
France Telecom R&D. Testing is commencing and will continue in the framework of
the European Commission project ATRIUM." The company claims that the Alcatel
7420 Edge Services Router is the world's first carrier-class edge services
router with the intelligence, scalability and reliability to deliver dedicated
and differentiated business IP services at wirespeed. The new device will
establish new wirespeed performance levels for broadband, differentiated
business Internet protocol (IP) services. Experts also seem to echo Alcatel's
confidence that the two new products will make a significant mark in the
high-end router market. Said David Passmore, research director of the Burton
Group, "The introduction of the Alcatel 7770 Routing Core Platform and the 7420
Edge Services Router, both based upon network processor technology, will make
Alcatel a credible vendor in the service provider IP router market." He added,
"We think Alcatel is a player to watch and expect them to become much more
visible in this space." On Wednesday Alcatel stock fell 3.44 to close at 62.44
on the New York Stock exchange.
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