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January 22, 2006

Nortel exits carrier edge router market

Nortel Networks Corp is pulling out of what it calls the "traditional" carrier edge routing market and abandoning its Multiservice Provider Edge (MPE) 9000 Neptune router for that market. It said it now plans to use the technology in other products.

By CBR Staff Writer

The company said it would no longer invest in the MPE portfolio as a stand-alone product offering for this segment, [but rather] focus directly on MPE as a platform for Nortel’s next generation VoIP and Wireless solutions.

The seeds of this decision from the Toronto, Canada-based telecoms and networking equipment vendor were in fact sown as long ago as last February when the MPE was among the offerings passed over by US RBOC BellSouth Corp in awarding contracts for the upgrade to its DSL network to ready it for IPTV. The broadband remote access server (B-RAS) contract went instead to a smaller player, Redback Networks Inc.

Industry pundits at the time speculated that this might be the death knell for the Neptune, which had virtually been developed with the BellSouth project in mind. With heavyweights like Cisco, Juniper, and Alcatel all competing in this space, it would appear that with the arrival of new CEO Mike Zafiroski and his avowed intent to stop Nortel trying to be all things to all people, the time finally came to throw in the towel.

Considering the market and window of opportunity, as well as future requirements to successfully penetrate this highly competitive space, Nortel has decided the traditional carrier router market will not yield the margins and returns required, said the company.

Nortel has nothing in core carrier routing beyond a relationship and small equity stake in Avici Systems Inc, and upped its presence in enterprise routing at the end of last year with the acquisition of Tasman Networks Inc.

It was a fairly dismal week for Nortel. Apart from having to announce the demise of the Neptune as a standalone offering, it was downgraded by Morgan Stanley over fears that its optical business may be facing the loss of a big customer.

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