Nortel to use Cambrian as entry into the metro market
By ROBERT PEASE
Fiber-optic network vendors envision a huge opportunity in the metropolitan market today in light of the escalating demand for data. Nortel Networks (Brampton, ON, Canada) dove directly into that market with the recent acquisition of Cambrian Systems Corp. (Kanata, ON, Canada). A longtime major supplier of long-haul optical-networking equipment, Nortel intends to accelerate its business offerings in the metropolitan area network (MAN) segment using Cambrian?s technology.
Cambrian Systems? OPTera product line is a ring-based dense wavelength-division multiplexing (DWDM) solution for metropolitan applications. The architecture provides the links between carrier-switching centers, Internet service providers, and corporate networks. The technology is designed to bridge the metropolitan network centers to the core, pushing optical networking to the edge of the network.
As data-traffic demand increasingly overshadows traditional voice traffic in these corporate areas, optical-networking solutions in the business arena are providing a growing market?one that has giants such as Pirelli, Fujitsu, Lucent Technologies, and now Nortel jockeying for a dominant position.
OCambrian has achieved its objective of the time-to-market advantage in this new metropolitan optical-networking business area,O says Don Smith, president of Cambrian. OBut while Cambrian successfully achieved one vital piece of a larger jigsaw puzzle, it was a piece that still needed other pieces around it. In terms of a shared vision and the ability to bring a team together that can accelerate those shared goals and meet customer needs, Nortel supplied those pieces.O
According to Current Analysis Inc., a Sterling, VA-based industry analyst company, the acquisition may lead to the first DWDM router/switch system designed for carriers. Current Analysis believes such a system would play into a general trend toward streamlining backbones in public wide area networks (WANs).
OSONET [Synchronous Optical Network] add/drop multiplexers are being replaced by direct optical interfaces on WAN switching equipment, such as Cisco Systems 12000s and Nortel Passports,O says Chris Nicoll, principal analyst for carrier infrastructure at Current Analysis. OThis has simplified network design and removed unneeded layers of equipment. Cisco took a bow and did not pick up CIENA following the Tellabs fiasco and so does not directly own any DWDM technology. Nortel is now in a position to combine Bay Network?s IP [Internet protocol] routing with the Cambrian DWDM technology and create the next generation of switching systems. It?s a gamble, but it makes sense to us.O
One attractive result for customers, says Smith, is the ability to provide a platform that is both protocol and bit-rate independent. By not worrying about what speed is in vogue or whether the protocol is Fast Ethernet or Gigabit Ethernet, customers are able to forecast demand more easily. OWhenever we ask a service provider for the top three issues they face with their networks, forecasting demand is typically within that top three,O says Smith.
On the Nortel side, the acquisition gave the company a jump-start in this wide-open market. OThe one area that Nortel does not have a large presence in is the metropolitan network,O says John Roth, vice chairman and chief executive at Nortel. OThe rules of the game in the metropolitan area are being redefined now because technology is finding a better solution than what has been used in the past.O
In the past, fiber-optic systems were built to accommodate voice traffic. But in today?s business areas, data is filling the networks?and traditional networks aren?t equipped to handle it. The often cited Odata bottleneckO is a reality in many metropolitan areas as networks designed for voice become burdened with data traffic.
OWe need to design a much more economical way to carry all this data traffic,O says Roth. OThe solution has to be about 30% less costly and much more flexible.O
The solution for Nortel was the acquisition of Cambrian. OWhat we?re talking about is an enabling technology,O says Brian McFadden, vice president and general manager of optical-network applications at Nortel. OThe technology we want to create will enable the bandwidth connectivity to bridge between the places where you?re generating the bandwidth on the desktop and the core backbone where you?re trying to transport it anywhere in the world. We believe this OPTera product can do that.O
Current Analysis?s Nicoll agrees and has no doubt about the significant advantages both companies gained through the acquisition. Cambrian, says Nicoll, was not a large player in the metropolitan space. Although it had a great technology in OPTera, the company lacked the market presence to make a major impact. By gaining Nortel?s corporate clout, carrier contacts, and deep pockets, along with significant research and development expertise, Cambrian is now expected to not only survive in a very competitive marketplace, but will likely become a major player.
ONortel couldn?t have picked a better player then Cambrian,O says Nicoll. OThey went right into a hot new market space without any WAN baggage to deal with, which would have been the case had they opted to acquire a more established player like CIENA who has an entire WAN product line. On top of that, Nortel got a pretty significant technology with the OPTera product line.O
McFadden also says this isn?t really a new technology for Nortel. Rather, Nortel is repackaging familiar technology for cost in the metropolitan area. Nortel will continue to work with Cambrian to further develop the OPTera product line. About 40 Nortel employees relocated to the Cambrian facility to create a larger team to accelerate such development.
OIt?s absolutely a time-to-market initiative,O says McFadden in describing the acquisition. OEvery customer we talked to told us that Cambrian had figured this out as opposed to other competitors, including ourselves at Nortel. So we decided to take what we learned in the long-haul, put it together with what Cambrian did in the short-haul, and we?ll have a world-class offering.O
Big fish, little fish
Mergers, acquisitions, and partnerships continue in the telecommunications industry with most geared to acquire a piece of technology that will provide any advantage in new product development and time to market. In a market where competition is the catalyst for fast-paced technological development, these marriages can make all the difference in staying at the edge of new technology.
In the metropolitan marketplace, other players see another huge market force walking into their neighborhood. The larger companies may be more accustomed to competing against each other, but for the upstarts and smaller companies that have gone head-to-head with Cambrian in the past, there has to be rising concern.
OThe small companies were already dealing with the likes of Pirelli, Lucent, and Fujitsu, and now they?re thinking another gorilla has just landed on the block,O says Nicoll.
Nicoll has some concerns regarding Nortel?s impact in the metropolitan area, even though Current Analysis rated the acquisition as very positive, with very high impact significance. One concern may be whether metropolitan fiber exhaust is more a question of a shortage of fiber in the ground to reach new sites, rather than a lack of capacity on existing rings. The problem lies, says Nicoll, in too few offices on the fiber ring and the expense of backhauling users to the optical network?a problem DWDM cannot solve.
ONortel is also entering a market where it will be competing with several industry heavyweights,O adds Nicoll. OThe Cambrian product is a very competitive offering, but Nortel will still have to work to make its presence felt.O
Nortel intends to do just that by decreasing time-to-market for product offerings. The acquisition already provided considerable momentum, and Nortel plans to stay a step ahead to gain its foothold in the metropolitan arena.
OThe way to move faster is to compete where you?re strong and partner where it makes sense,O says Nortel?s Roth. OThe technology communities are very networked, and secrets are not secrets for long.
Knowing where you?re going is one thing, but actually getting the fine details done and all the other support is really a very key item. It?s about time to market. So the question isn?t only if we know what we?re going to do, it?s really how long will it take somebody else to actually copy what we?ve done?O q