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Technology Stocks : Voice-on-the-net (VON), VoIP, Internet (IP) Telephony -- Ignore unavailable to you. Want to Upgrade?

To: Stephen B. Temple who wrote (2267)	1/6/1999 11:39:00 AM
From: Stephen B. Temple	Respond to of 3178

Clash over convergence January 6, 1999 Network World: Bill Homa had a crucial access-equipment choice to make early this year when he decided to upgrade to an all-ATM statewide WAN. The chief information officer of Hannaford Brothers, a chain of grocery stores based in Scarborough, Maine, was throwing away his slow, outdated satellite network using very small aperture terminals at 46 stores statewide. He wanted to skip right over frame relay and go directly to Bell Atlantic's ATM service - T-1 at the stores, OC-3 to the data center - because the chain's inventory and decision-support systems were chewing up bandwidth and he wanted the capacity to do videoconferencing, too. To help pay for the project, Homa needed to put voice on the network, eliminating long-distance tolls. He had to decide whose convergence product to use. For Homa, it was really no contest. His sites had a mishmash of six different voice vendors' PBXs and key systems. But they all had the same WAN equipment: Cisco routers. When Cisco asked him to test its new MC3810 multiservice access device - basically a router with analog and digital PBX ports and voice compression - Homa leapt at the chance. The only voice switch vendor he considered was Nortel Networks, which offered a multiservice access concentrator that would have had to coexist with a Cisco 2500 router. "It paled in comparison with what Cisco could do with one box," Homa says, noting that the MC3810 has interfaces with all major PBXs, while most voice vendors' convergence equipment optimally works only with their own PBXs. Welcome to the convergence battle, where the titans of the voice and data industries are banging into each other but remarkably have, so far, failed to crack each other's markets. When it comes to selling switches into carrier networks, the kings of the hill are still Nortel Networks and Lucent. Their sales of new IP-enabled carrier-class switches and IP trunking options for traditional central office boxes are going gangbusters with traditional carriers. But when it comes to the enterprise, it's still Cisco and the other internetworking vendors that rule the roost, as long as any part of the sale has to do with data applications. Consider Lucent's aggressive foray into the enterprise. The company has spent more than $2.5 billion buying several companies that make everything from Ethernet campus and workgroup switches to ATM backbone gear, and has signed OEM agreements for other hot technologies, such as voice frame relay access devices. Lucent has rebranded much of its acquired technology under the Cajun name originally employed by one of its acquisitions - Gigabit Ethernet switch maker Prominet - and has invested heavily in marketing. It practically smothered the fall NetWorld+Interop 98 show in Atlanta with its banners and slogans. Yet Lucent's most recent quarterly earnings statement attributes its entire enterprise-business growth to its older technologies, continuing strong sales of its flagship PBX - the Definity Enterprise Communications Server - and its increasing dominance of the call center market. It mentions nary a word about the contribution of its enterprise data products to revenue growth. And as Menachem Abraham, the Prominet founder who now heads Lucent's Enterprise Infrastructure Products Group, admits: "We're still in the very early stages." Analysts point out, and Lucent officials freely concede, that the company's strategy is basically a bet on the death of routing. Lucent marketing officials like to say they're building a portfolio that includes "everything but a router." Some observers believe that this kicks Lucent out of many users' bids. But Lucent officials explain that their company is already so large that the slow-growth router business would hardly contribute to revenue growth and profits down the road. "It would be a waste of time," says Susan Barbier, a Lucent marketing director. That's especially become an issue since rival Nortel's mid-year acquisition of Bay Networks, Cisco's No. 1 competitor and Lucent's erstwhile partner in user bids for voice and data equipment. THE RELIABILITY QUESTION For its part, Cisco's challenge will be to prove that it can equal or surpass the voice network reliability standards users and service providers have come to expect from "Old World" stalwarts Lucent and Nortel. Arguably, it is this issue alone that will determine whether users will rely on Cisco to usher them into the New World of Internet telephony or if they'll have to ride on the shoulders of the Old World reliables. Cisco is determined to venture alone into the voice world. Company Chairman and CEO John Chambers recently stated that Cisco will rely on its own skills to develop, service and support voice network products after partnership talks with Lucent and Nortel collapsed. Chambers also ruled out merging with a major voice vendor and characterized companies such as Lucent and Nortel as Old World establishments "trying to compete in a New World environment." Instead, Cisco has been buying smaller niche telephony vendors in an effort to become more of a one-stop shop for packetized voice. The most intriguing of these acquisitions is Cisco's purchase of Selsius Systems in October. Selsius is a supplier of network PBX systems for telephony-over-IP networks. Selsius' technology will help users move from conventional, proprietary circuit-switched PBXs to multiservice LAN systems capable of integrating data and voice, Cisco says. "This is the first real alternative to proprietary PBXs," says Byron Henderson, director of marketing in Cisco's multiservice access business unit. The Selsius acquisition complements Cisco's purchase earlier this year of programmable switch maker Summa Four, Henderson says. Cisco says Summa Four's switches will enable it to offer telephony applications to new and existing service providers, and extend them to a voice-over-IP infrastructure. The Summa Four switches also provide application developers with an "open services environment" for writing software for circuit- and packet-switched networks, Cisco claims. But the Selsius and Summa Four gear will have to compete, respectively, with Lucent's Definity for the premises and 5ESS telco switch for the central office. And Lucent's mid-year addition of IP telephony trunking options to platforms was specifically designed to keep its customers from straying to new vendors - even those now under the spacious Cisco umbrella - just as Cisco's multiservice boxes are meant to hang onto data customers as they incorporate voice. <<Network World -- 01-04-99, p. 73>>