Must-read. Internet 2002, Gearing Up [Nice ASND references]
zdnet.com
August 31, 1998
By Tom Steinert-Threlkeld
'Data guys' take on 'voice guys' in fight to create
future networks
Communications networking is being flipped on its head.
Once, engineers spent decades trying to figure out how
to move data effectively over a voice network. Now,
they spend most of their time trying to figure out how to
move voices over data networks. Along the way, public
circuits are being transformed into private ones, through
encryption, firewalls and other security measures.
This leaves data gear suppliers trying to make sure they
don't salivate onto their keyboards at the prospect of
public networks transforming into packet networks.
CIMI Corp., a Voorhees, N.J.-based research
company, estimates that creating this 21st century Net
represents a $380 billion opportunity over the next
decade to equipment suppliers. [And we wonder if LU is going to pull the trigger...]
So, it's no great revelation that equipment suppliers both
from the "old world" of telephone switching and the "new
world" of data routing will be knocking heads - hard -
over that span.
The four big companies of data networking used to be
3Com Corp., Bay Networks Inc., Cabletron Systems
Inc. and Cisco Systems Inc.; the new lineup is shaping
up to be Cisco Systems Inc., Lucent Technologies Inc.,
Northern Telecom Inc. and, possibly, Ascend
Communications Inc. [Now this man knows what he's talking about...]
Voice Vs. Data
"They're on a collision course," says Vertical Systems
Group analyst Rick Malone. "The Internet has its flaws,
but it also is the glue that is causing these companies to
compete with each other."
But this "new public network," as Ascend calls it, will not
be the same as the Internet that went before it. Instead of
bearers of data exchanging all their traffic at public
"peering" points in one seemingly universal Net, new
competitive carriers, Internet service providers (ISPs),
clean-sheet network developers and traditional telephone
companies all will be busy creating multiple Internets -
"parallel shared networks," as Lucent market
development director Susan Barbier puts it. They will
operate effectively on their own but also will feed into
and from each other and the Internet itself.
That will provide additional fuel to the fires that are
driving this competitive collision. Cisco considers itself
the king of the "new world" of data gear - and it has the
track record to back it up. The undisputed king of
Internet routing and data exchange on corporate
campuses reports annualized revenue just shy of $8
billion - yet commands a $100 billion market value.
By contrast, Nortel has twice the revenue, one-fourth the
market value - and less than $1 billion per year in data
networking revenue.
Lucent? A wild success since being spun off from AT&T
Corp. two years ago, Lucent is four times Cisco's size,
yet its market value is 11 percent higher. The company is
not saying how big its infant data networking business is. [Fascinating]
The stakes can be seen through the prism of what is
arguably the parallel net that has the greatest global reach
at present: the business-oriented web of Amsterdam's
Equant NV. An outgrowth of a consortium of European
airlines, Equant operates a network that uses a packet
networking technology called frame relay. Yet, most of
its traffic adheres to Internet protocols, providing 15,000
connection points in 220 countries.
Equant uses 3,700 Cisco routers and 387 Nortel
Passport switches in its network. In effect, it has created
an internally competitive duopoly - and it is not likely to
stray too far from that pair of "technology partners."
"The issues are so big you can't wander too far away,"
says Cisco's networking vice president, Kevin Formby.
The fact that a number of new aspirants to Cisco's crown
as the king of routers - such as Avici Systems Inc. and
Juniper Networks Inc. - look like they will be first to
market with equipment that can handle trillions of bits per
second is not suasive. "It would take a real quantum
leap," to make Formby switch, he says. Something like
"5 percent of the cost and a clear technology lead of a
year or two" might.
Formby, like CIMI's Thomas Nolle, considers
technology leads in data networking to be only
temporary. Besides, if there's something there, "Cisco
will buy the company," Formby predicts.
Similarly, breaking into the grid of telephone carriers is
critical for the data guys - and keeping them out is crucial
for the voice guys.
Nortel President and Chief Executive Officer John Roth
could not have been pleased when his company, for
instance, found itself garnering no glory in Sprint Corp.'s
announcement of its "unlimited bandwidth" Integrated
On-Demand Network. The key new piece of equipment
- a small box that converts traffic from homes or
businesses into same-sized packets of data - would
come from Cisco. As time goes on, more routing and
switching gear is expected to come from the Silicon
Valley challenger.
Nortel, whose switches are already in Sprint's network,
won't concede. "The bottom line on that is, time will tell,"
says Senior Vice President Klaus Buechner. "The
incumbent always has certain advantages."
So far, to win the day, the voice guys have counted on
their expertise in providing highly reliable connections in
massive public networks as well as their long-standing
sales and service relationships. They look at the data
guys as having expertise that comes in a "best efforts"
medium, the Internet, with relatively little support.
But that's ending. Nortel wants the world to think it will
be the No. 2 player to Cisco, once it completes its $9
billion acquisition of Bay Networks. And even Cisco
expects Lucent to be a "formidable" player as it gears up.
Indeed, Cisco's chief executive, John Chambers, at one
point explored alliances with Nortel and Lucent, but gave
up. But if Cisco wants the ability to use the voice guys'
contacts and relationships to make inroads with major
telecom carriers, then one of the data guys may show the
way.
Ascend, in disarray a year ago, is looking smart now. Its
latest acquisition: Stratus Computer Inc., which it bought
solely to get servers that allow it to handle phone signals
effectively on data networks. Ascend's focus for the past
six years: selling access equipment, switches and other
gear to ISPs - and carriers such as AT&T and
WorldCom Inc.
Can the data guys flip the voice guys on their heads, as
the Net goes onto their home turf? "The proof's in the
pudding," Ascend Product Marketing Director Jeff Kiel
says. [Sounds pretty confident...]
Cisco can be reached at www.cisco.com
Nortel can be reached at www.nortel.com
Lucent can be reached at www.lucent.com
Equant NV can be reached at www.equant.com
Internet 2002:
Table Of Contents
The Net: Not Just
Data Anymore
Circuit Switching
Vs. Packet
Switching
Laying "Dark
Conduit"
See Me, Hear Me
In For The Long
Haul
Qwest For The
Top
Building
Appetites
Beam Me Up,
Craig
O2: Net Lifeline
Highly Charged
Others To Watch
For
Copyright (c) 1998 Ziff Davis, Inc. All Rights Reserved. Reproduction in whole or in part in any form or
medium without express written permission of Ziff Davis, Inc. is prohibited. Inter@ctive Week and the
Inter@ctive Week logo are trademarks of Ziff Davis, Inc.
|
