Nortel shifts MEN focus to packet optical transport

MARCH 3, 2009 By Stephen Hardy UPDATED 4:30 PM EST -- After putting it up for sale, then taking it off the auction block, Nortel has revealed another shift for its Metro Ethernet Networking (MEN) division.

MARCH 3, 2009 By Stephen Hardy -- After putting it up for sale, then taking it off the auction block, Nortel (search Lightwave for Nortel) has revealed another shift for its Metro Ethernet Networking (MEN) division.

According to an email distributed to the media yesterday, Nortel has decided to "refocus our investment from the Carrier Ethernet switch/router (CESR) segment towards next-generation packet optical transport segments." The CESR products affected include the Metro Ethernet Routing Switch (MERS) 8600, the Metro Ethernet Services Unit (MESU) 1800 line, and the Metro Ethernet Manager (MEM).

The email was quick to assert that Nortel isn't abandoning the space. "We have dedicated resources that will continue to work with all existing CE customers. We will continue to service, support, and ship products to Nortel's CE installed base of customers," the email read. "This decision does not impact our Ethernet access and aggregation solutions, or our Enterprise ERS 8600 portfolio."

Meanwhile, asserting that optical and Ethernet still go together, Nortel "will provide service providers with the bandwidth that they are demanding and we will continue to offer a full suite of transport products to meet this demand," the email continued. "We are not abandoning our Carrier Ethernet technology innovation, but simply focusing our Carrier Ethernet investment away from the switch/router segment. This decision supports the goal to make Nortel a more focused company."

Details of how the shift in focus will affect Nortel's optical portfolio were not released. However, spokesman Ryan Hill said in a separate email to Lightwave today that much of the technology development will focus on increasing the packet capabilities on such existing platforms as the OME 6500 and OM 5000. The company will also look to expand the capabilities of its metro Ethernet and aggregation products as well as further ongoing partnerships with such companies as ANDA Networks (search Lightwave for ANDA Networks) and Axerra (search Lightwave for Axerra).

"Specific examples" Hill cited included:

  • "Support of Ethernet OAM and E-SPRing on both the OM 5000 and OME 6500 by 2H09, and PBB-TE (PBT) support on OME 6500 in 2H09.
  • "A multiservice edge/aggregation portfolio (i.e., OME 61x0, OM 50x0) that provides low-cost Ethernet services access into OME 6500 and OM 5000 (currently available and evolving).
  • "A portfolio of Ethernet CLE devices via partnerships that complement our packet optical/edge investments, e.g., ANDA Networks for EoFiber and EoPDH supporting PB/PBB/PBB-TE, Ethernet OAM etc., Axerra Networks for Multi-service Pseudowire access over Ethernet, etc. (currently available and evolving)."

The move drew approval from Dana Cooperson, vice president and practice leader of Ovum's (search Lightwave for Ovum) networks practice. "Nortel was the market leader in ON [optical network equipment] back in the bubble days. Although it never fully recovered from the massive restructuring required when the bubble burst, it has maintained the number three position since 2006," Cooperson said in a statement issued to the press.

"By focusing packet investment on its optical products, we believe MEN will best capitalize on its historic ON strength and provide critical mass to tackle the still early and growing market opportunities for 40G/100G-based products and converged packet-optical (CPO) products," she added.

Cooperson's remarks also hinted at why Nortel is in its current fiscal predicament. Cisco, Juniper Networks, and Alcatel-Lucent currently dominate the Ethernet switch/router market; meanwhile, Nortel's share in this space has shrunk from 10% to 2% over the last four years as spending shifted from ATM, IP, and MPLS, according to Cooperson. Nortel championed Provider Backbone Transport (PBT) as an alternative to MPLS, but that effort appeared to founder when its largest PBT customer, BT, changed its mind and decided to deploy MPLS instead.

Meanwhile, Nortel squandered much of its leadership position in ON. "Nortel's biggest post-bubble problem in ON can be summed up as 'too little investment too late:' While the company has continued to build differentiated products, its next-generation SDH and WDM products were late to market and missed the window for some key network builds," Cooperson asserted. "As a consequence, as the market grew 35% from 2006 to 2008, to $16.3 billion, Nortel's revenues stayed essentially flat at $1.1 billion."

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