Delays hit key Nortel product
Simon Tuck
00:00 EST Monday, February 25, 2002
OTTAWA -- The release of Nortel Networks Corp.'s new telecommunications switch, considered a crucial weapon in the company's battle to revive its ailing fibre-optics business, has been pushed back for a second time.
Analysts say the latest delay may be a sign the product is not receiving a warm welcome from potential customers.
"I think they're probably tweaking the product because [telecom] carriers weren't too impressed," said Michael Urlocker, a technology analyst with UBS Warburg Inc. in Vancouver.
The optical switch, a high-speed cross-connect device that links other switches in a network, was originally supposed to be launched about a year and a half ago. Then last fall, Nortel said the product -- labelled HDX -- would be ready for market by the end of 2001.
But Brian McFadden, Nortel's president of optical long-haul networks, told analysts during a investors' conference in New York that the HDX switch is now scheduled to be available "in the mid-year time frame."
Mr. McFadden said the switch is now being tested in a couple of customer labs, which matches what another company executive said last fall.
"There's a lot riding on it," said Philippe Morin, Nortel's vice-president of next-generation optical products, last October.
"This is the type of product that could change the whole playing field . . . like we did on OC-192."
Nortel's OC-192 transmission gear is considered the key product that triggered the company's rise to the top of the optical networking market and fuelled staggering growth in 1999 and 2000.
The new switch, developed largely in Montreal, is considered a high-stakes bet because the Brampton, Ont.-based company had hoped that it would make Nortel a key player in a budding market. It had also hoped the HDX product would provide a big lift for Nortel's optical business and a ray of hope for the entire company. The new switch also aims to fill a glaring gap in Nortel's repertoire of optical products, a nascent market that has so far been dominated by Ciena Corp. of Linthicum, Md.
Neither Mr. Morin nor Nortel spokeswoman Tina Warren would comment this week on the HDX switch's progress. Ms. Warren issued a one-line written response to an interview request: "HDX is available now and in lab trials."
Mark Lutkowitz, a market analyst at Communications Industry Researchers of Charlottesville, Va., said he's not surprised by the switch's latest delay, and doesn't expect it will ever produce a big win. The product didn't particularly impress the telecom service providers and other large customers that tested it, he added. "It just wasn't what they were looking for."
Mr. Lutkowitz added that there's no guarantee the new switch will meet its new target.
However, Mr. Urlocker of UBS Warburg said it's possible that the product is ahead of its time.
Analysts agree there's a great deal at stake in the battle to control the market for optical cross-connect switches. The devices are important to telephone companies and other telecom service providers because they can boost network capacity and allow Internet bandwidth to be allocated based on demand. That would make networks more efficient and make possible such applications as low-cost Internet accounts that would be available only during off-hours.
[Harry: Near term TLAB has abandoned this market to TELM as demand at the core is weak. I wonder why the expectation of NT are so high on this product as a result.] |
