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Technology Stocks : Nortel Networks (NT) -- Ignore unavailable to you. Want to Upgrade?

To: The Phoenix who wrote (5888)	5/20/2000 8:48:00 PM
From: telecomguy	Read Replies (2) \| Respond to of 14638

OK Gary......you got me exaggerating! Betting the company is a an overstatement. But $10 billion is still a lot of money........and as far as $1 billion revenue in Carrier space, I guess most if not all of that revenue is good ol' router sales -- the market that is being attacked by Juniper & few others quite successfully? Didn't some analyst observe that CSCO's revenue to Carriers and ISP's in fact slowed down in the last quarter due to upstarts attacking CSCO's high-end market? Also remember that NT is probably not all that interested in the enterprise space -- just like they mfg Meridian PBX's for the enterprise voice market but it's not a core market/product in their R&D & strategic positioning point of view. There is a clear revolution taking place in the networking world -- mostly due to two factors never experienced before; 1) unsatiable bandwidth demand (optics) 2) access to the public network ANYWHER, ANYTIME (wirelesss) Now, tell me where and how well CSCO is positioned in this TWO FUTURE NETWORK DEFINING space? In these two critical space that will dictate the networking market in the future, CSCO is NOT a gorilla and it may not even be a monkey (more like a chimp!). Hence their frantic effort to move their business from enterprise on-premise box market to the public networking market. And of course, the problem as I've mentioned many times is that this public networking market has huge & formidable competitors that have lot of advantages over CSCO. Furthermore, market for specialized routing at the customer's premise is likely to erode as opposed to grow. Why? Because the enterprise will likely opt to sub out data communication to ISP's and Carriers. We have to remember that it's more of an anomaly that the data comm world evolved the way it did -- where the enterprise owned and operated their own IP & data network. This happened mostly because it the RBOC's and PTT's did not provide the data networking service at value prices that the corporations needed/demanded.........(mostly due to inefficiencies, monopoly attitude, lack of competition, etc.). This is all changing -very rapidly as we see thousands of ISP's, CLEC's, ILEC's, ASP's, Wireless, Carriers being formed to address the enterprise communication needs. Conclusion? Big part of the enterprise, on-premise CPE market for routers will be eroded in the low-end by NT's open IP initiative (judging by the onslaught of hardware/software giants that are licensing and developing on NT's routing codes) and in the high-end by the ISP's and Carriers who will take over enterprise communication (and eventually even the application) requirements. So when you migrate corporate CPE market to the Carrier space, all of a sudden NT is back in the game since this is their strength -- building scaleable, integrateable, redundant, 99.99999% reliable platforms to handle multi-media apps all back-end integrated into their optics backbone which they currently control......... All in all, when I step back and look at NT's positioning strategy, it's amazingly coherent and focused on controlling the network from the backbone to the edges. Chambers is not a stupid man and he knows in fact that if he cannot compete in the ISP/Carrier space, CSCO will get marginalized like COMS -- so in fact CSCO's move into the Carrier space is NOT a smart, optional business decision - IT IS A NECESSITY FOR SURVIVAL for CSCO. My statement that CSCO should have redeployed the profits into their enterprise space was tongue-in-cheek. They HAVE to crack the carrier market otherwise they are doomed. Chambers knows this --- but the new game is being played in a turf which CSCO does not have a proprietary edge and where distribution channel and salesmanship is far less important. So I am actually agreeing with you that CSCO SHOULD go into the carrier space -- but going further -- they NEED to go into the carrier space JUST TO SURVIVE in the long-term, never mind continue their 50% YoY growth!