Amid the media reportage that Nortel Networks is dumping its Carrier Ethernet investment, the bankrupt vendor has clarified its position.
“We are not abandoning our Carrier Ethernet (CE) technology innovation, but simply focusing our Carrier Ethernet investment away from the switch/router segment,” a spokesperson said in an e-mail to xchange and other outlets. “This decision supports the goal to make Nortel a more focused company.”
The Ethernet access and aggregation products and the enterprise ERS 8600 portfolio will remain untouched, he stressed.
The part of the portfolio that the vendor is cutting is the provider backbone bridging with traffic engineering, or PBB-TE, also called provider backbone transport, or PBT – a technology meant to compete with MPLS as a more efficient way to carry Ethernet traffic. It’s a technology Nortel has put significant resources into but as been unable to recoup so far.
AND so, R.I.P, 8600 Metro Ethernet routing switch and friends. But Nortel plans to take that investment and instead put it into its next-generation packet optical transport segments, “reflecting the momentum and stability we are seeing in this market,” the spokesperson said.
Nortel was also quick to say that dedicated resources remain which will support all existing switch and routing customers. “We will continue to service, support, and ship products to Nortel’s CE installed base of customers,” the spokesperson said.
The refocusing of investment is the vendor’s first major post-bankruptcy strategy announcement. “While this decision was no doubt a painful one, we think this is the right move to improve MEN’s post-bankruptcy chances for market success,” said Dana Cooperson, vice president and practice leader of Ovum Ltd.'s networks practice, in an analyst brief.
It looks like a smart move: According to Ovum, Cisco Systems Inc. commands almost half – 46 percent – of the market for these solutions, followed by Juniper Networks, at 16 percent, and Alcatel-Lucent, at 13 percent. Nortel meanwhile has seen its share of this market decline from 10 percent to 2 percent as spending has shifted away from ATM toward IP, MPLS, and Ethernet.
Nortel never recovered from early-backer BT’s July 2008 decision to deploy MPLS instead of PBT, Cooperson said.
The refocus should help the chances for Nortel’s Metro Ethernet division, which the vendor has been considering selling off.
“By focusing packet investment on its optical products, we believe MEN will best capitalize on its historic optical networking strength and provide critical mass to tackle the still early and growing market opportunities for 40G/100G-based products and converged packet-optical products,” Cooperson writes. “While too late to capture the largest initial 40G opportunities (e.g., at AT&T, which Nokia-Siemens won), Nortel’s 40G solution is highly differentiated; hit the market as it was moving beyond early adopters; and allows Nortel to muscle in to networks built with other vendors’ gear.”