Nortel favoured to reap Sprint windfall
High-speed switch could help company compete with Cisco to supply $2-billion network
Globe and Mail
globetechnology.com
Nortel favoured to reap Sprint windfall
High-speed switch could help company compete
with Cisco to supply $2-billion network
Wednesday, December 9, 1998
SIMON TUCK
Technology Reporter
Ottawa -- Northern Telecom Ltd. is poised to nab a huge chunk of
business from rival Cisco Systems Inc. through a mammoth Sprint Corp.
project expected to be one of the largest in telecommunications history.
Sprint hasn't picked out all of the equipment for its new $2-billion (U.S.)
network but analysts now say Northern Telecom -- seen as out of the picture
when the project was announced in June -- has a new high-speed
multiservices switch that could grab just as big a piece of the pie as Cisco.
Discounting other suppliers and partners, that would mean the Brampton,
Ont.-based company could earn as much as $800-million from this deal over
the next five years, one Toronto analyst said.
"That's some of the stuff Cisco was supposed to get," said Mark Lucey, a
technology analyst at Kearns Capital Ltd. "It looks like Nortel and Cisco will
share the lion's share of this account."
But many analysts say it's difficult to estimate how much each company will
get because Sprint could build the network with almost any mix of Cisco
routers and Northern Telecom switches. The size and shape of the network,
which Sprint calls the Integrated On-Demand Network or ION, will be largely
determined by the market's response.
Charles Fleckenstein, Sprint's manager of technology services, said the
company is still "kicking the tires" on the new switch, called the Passport
15000, but left little doubt about its potential. "Obviously, Nortel is in our
plans. [It] will probably get a lot of work from this project."
Another Sprint official said this week both companies' equipment will be
used.
A Northern Telecom spokesman said it has reached no deal with Sprint. "It's
a huge opportunity for us," said Rod Wilson of the carrier packet networks
division. "Carriers like Sprint do not bring things into their labs lightly."
Northern Telecom has made great progress since June.
ION, scheduled to go into action next month, was described during its
unveiling as a venture between Sprint, data networking giant Cisco, software
operation Bellcore (owned by the Bell companies) and retail giant Radio
Shack, which is doing the customer services and is selling products.
The project, designed to integrate data, voice and video services over a
single network for business customers, was seen as a major loss for
Northern Telecom, which has long been a key supplier for Westwood,
Kan.-based Sprint.
In the past six months, however, three key changes have helped turn the
tide.
In August, Northern Telecom completed its $7.6-billion purchase of Bay
Networks Inc. of Santa Clara, Calif., giving it a major data networking
presence. Three months later, the Canadian company, now referring to itself
as Nortel Networks, released the Passport 15000.
Meanwhile, the focus of ION moved from Sprint's marketing department --
where there was a strong Cisco tie -- to its engineers, who have worked for
years with Northern Telecom.
On Nov. 11, Marty Kaplan, Sprint's highly respected chief technology officer,
endorsed the 15000 in a press release. "We are pleased to be a lead lab
trial customer for the Passport 15000 as we continue toward a single unified
network offering total integration of all services," Mr. Kaplan was quoted as
saying.
Mr. Fleckenstein didn't deny Mr. Kaplan's support is meaningful. "Marty
Kaplan endorsing anyone is significant."
If Northern Telecom does land a generous piece of the ION project, it will
mean a lot more than just revenue. Landing a large, leading-edge customer
such as Sprint would be a huge endorsement for Northern Telecom and its
high-stakes bet on data networking. The 15000 is also being tested by
Transpac, a unit of France Telecom SA.
Mr. Wilson said the company believes the 15000, which sells for $5,900
(U.S.) a port, has the potential to top the $1-billion-a-year revenue mark and
become the most important product in its |
