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Commentary: Verdict not in yet on Nortel's Open IP initiative

Incorporated into servers, PCs, cell phones, personal digital assistants and other devices, routing software could provide more widespread connectivity and improved security, but it remains to be seen.

    By Tim Smith, Gartner Analyst

    In November 1999, Nortel Networks announced its Open IP Environment, designed to give developers open access to its routing code, which would be incorporated into hardware other than traditional routers, such as servers, processors and devices. At the same time, Nortel lowered prices on its routing products.

    See news story:
    Nortel takes new road against rival in router market
    Gartner's assessment is that this initiative has not greatly affected the routing market. Gartner estimates that Nortel's share of total revenue in the router market slipped from 4.5 percent in first quarter 2000 to 4 percent in second quarter 2000, while that of the overwhelming market leader Cisco Systems grew from 81.8 percent in first quarter 2000 to 83 percent in second quarter 2000.

    Nevertheless, Gartner continues to believe that Open IP Environment has potential. Incorporated into servers, PCs, cell phones, personal digital assistants and other devices, routing software could provide more widespread connectivity and improved security. In turn, the routing market itself would expand significantly because sales of high-volume devices would stimulate a big appetite for licensed routing software.

    The main challenge is to prove that routing code can be easily integrated into simpler hardware, and that doing so can truly benefit customers. Gartner expects that devices with a richer set of routing functions will appear by third quarter, 2001.

    Nortel will not be alone in attempting to address this broader market. Cisco is also moving to include derivatives of its Internetworking Operating System (IOS) in a wider variety of devices.

    (For related commentary on Nortel and staffing issues related to its recent expansion plans, see TechRepublic.com--free registration required.)

    Entire contents, Copyright © 2000 Gartner Group, Inc. All rights reserved. The information contained herein represents Gartner's initial commentary and analysis and has been obtained from sources believed to be reliable. Positions taken are subject to change as more information becomes available and further analysis is undertaken. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of the information. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof.