Nortel's Layer 3 backbone switch still a moving target

Nortel's Layer 3 backbone switch still a moving target

Users hoping to see Nortel Networks next-generation Layer 3 backbone switch this month will have to wait a little longer because the company has delayed delivery again - this time until the second quarter.

In what is becoming the saga of "The Switch that never was", Nortel's Accelar 8600 has run up against its fourth false start since it was announced 11 months ago. And it could be up to nine months late from the time it was supposed to ship - October 1999.

Since the first announcement, Nortel has pushed the ship date to November 1999, March 2000, and now the second quarter.

Why? Nortel says it wanted to make sure the 8600 could serve the market for which it was initially designed - large enterprise core/backbone/data centre environments - as well as emerging carrier-oriented markets.

These new target markets include ISPs, application service providers, optical switching, multitenant buildings in which landlords essentially act as ISPs and other more "esoteric" carrier applications, says Clive Foreman, a vice president in Nortel's Enterprise Solutions group, formerly Bay Networks.

Additionally, Nortel is adding some enhanced look-up engines to the 8600 so it can process wireless access protocol (WAP) traffic and function as a back-end switch for wireless data infrastructures, says Bert Armijo, director of product management for Enterprise Solutions.

"Those were things that were outside the scope of the original project," Armijo says. "But given the size of the opportunities, we didn't feel we could leave them lying alone."

The Nortel officials say they haven't missed any significant revenue opportunities by delaying the switch.

That may be because the large enterprise market is growing at only about one-third the rate of the service provider and small-midsize enterprise businesses.

But Nortel did lose about three per cent of its share of the Layer 3 Ethernet switch market in the fourth quarter of last year, Foreman says, citing data from research analyst company the Dell'Oro Group. He adds, though, that Dell'Oro's numbers include Layer 3 "capable" switch ports in addition to pure Layer 3 devices.

Other analysts note that Nortel's enterprise share has been slipping, but the company could make up for that falloff and then some in the WAN and service provider markets.

"They have obviously been losing share, but it's important that they have these new features in order to be successful in some of these new areas," says Esmeralda Silva, an analyst at market research firm IDC. "They are clearly moving the Accelar product beyond the enterprise and addressing more lucrative segments that they can get higher margins on."

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