If there’s one constant in the networking market at present, it’s this: convergence. Convergence of technologies and convergence of companies.
Late last month giant US telco Nortel officially merged with networking company Bay Networks. Lucent Technologies has been buying up ATM, gigabit ethernet and remote access vendors and there is also speculation that Alcatel, Ericsson and Siemens will bid for the likes of Ascend, Cabletron, Fore Systems and 3Com. Meanwhile, with the industry moving toward converged voice and data over IP networks, networking giant Cisco is entering the ranks of the Nortels, Lucents, LM Ericssons and Siemens.
At a press conference in Queensland earlier this month, Nortel/Bay Networks marketing manager David Shrigley said traditionally voice and data have been separate, with voice based on circuit switching and data based on packet switching technologies. Voice has developed in a regulated world, whereas data hasn’t, and the applications have also developed separately — with different companies and different technologies. However, global deregulation and application developments are now driving convergence. “In general there is a migration toward IP [Internet protocol] and it’s driven by the explosion of traffic and e-commerce and communications-type capabilities.”
Shrigley says the idea is to get to a point where IP is the primary transport and all data types can be easily moved around the network. He believes packet transfer is the technology of choice, particularly in the service provider space, where traffic has dramatically increased.
Seamless integration is also vital as enterprise customers increasingly see the world as having one network. Customers want unified LANs and WANs, voice and data, circuit and packet switching, enterprise and service providers, and applications and infrastructures.
Shrigley believes there are only two companies in the world which have market-hardened routing technologies to deliver this — Cisco and Bay.
Nortel’s regional MD Brian Davis says companies like Nortel had tended to make things perfect and study them in depth, which slowed them down. He says the speed of the merger (in six weeks) suggests how fast the new company will operate. “If the Bay culture is faster, and it is, they’re definitely going to pull us up to speed.”
A single vendor will mean faster service for customers, according to the merged company’s region director Steve Rust.
“At the moment there are wires going around the building for telephony, wires for data, different suppliers, different vendors’ equipment, different post sales and support organisations.”
Shrigley says the deal was worth $US9.1 billion when negotiations began, however, market changes since June meant the value of the share exchange was now $US6.7 billion — still the largest merger in the history for data communications.
The merged EDN (Nortel’s enterprise data networks division) and Bay Networks will operate as a wholly owned subsidiary of Nortel. The name “Bay Networks” will eventually be dropped.