Wrapping a combination of technology from the telecom-oriented side of Nortel with the Internet-based data equipment acquired from Bay Networks last year, the company is hoping to convince corporations that they can send phone traffic across a data network. Such a network can translate to significant cost savings for a company, though there are continued questions about the reliability of phone calls that employ such a scheme.
Nortel executives said they hope to offer a wide range of options so that everyone from early adopters to conservative network managers can take advantage of the technologies they plan to ship this fall into the year 2000.
There is some question as to how significant a market opportunity there is for networking technology that unifies the Internet and telephony, despite general agreement that the "convergence" of these types of traffic is the wave of the future. Regardless, every major networking player--including Nortel competitors Cisco Systems and Lucent Technologies--has articulated plans for the convergence of voice and data across one Internet-based network layout.
"Our view is you have to offer a choice," said Rick Moran, vice president of global marketing for Nortel's enterprise solutions division.
Wall Street looked favorably on the firm's moves, as Nortel stock opened higher today, trading above its 52-week high.
The rollout from Nortel offers the most significant evidence yet of integration between the Canadian telecommunications equipment firm and Bay Networks, the Silicon Valley-based data networking company it purchased last year. That move was one of the first among many in the networking industry that signaled a new era for the market, provoking a slew of acquisitions and strategy shifts by various companies to address a future in which telephone and Internet technologies are combined.
"We really feel there will be a sigh of relief from our installed base of customers who appreciate the fact we're getting to this new world [of telephony and data]," said T.J. Fitzpatrick, president of Nortel's Internet voice solutions, during a press conference today.
Nortel announced the strategy today with meetings in New York and Santa Clara, California, as well as at the Supercomm telecommunications industry trade show in Atlanta.
Bill Hawe, Nortel's chief technology officer, said migrating to the new technology should be smooth. Existing Nortel technology will continue to work as businesses deploy the new products to their networks, he said.
Voice is naturally part of the Internet, Hawe added. "For some reason, people think of telephony as separate. What we put in place here is an architecture, a common and integrated architecture for telephony applications."
The previously reported Internet protocol (IP)-based telephony strategy plans include an Internet Communications Architecture--or "Inca"--that ties traditional phone systems to data networks. The technology is targeted at various corporate niches using PC technology, IP-based phones that users can plug into a typical network connection jack, Internet enhancements to Nortel's Meridian voice PBXs, and integration with Bay's Accelar 8000 data switch, as well as network management software and related tools.
The Inca technology--used in conjunction with data products such as Bay's BayStack hardware and software for small and medium-sized businesses--will allow smaller firms to take advantage of IP-based telephony, according to Nortel executives.
"In the long run, it will all be IP--there is no question," said Nortel's Moran.
But Moran noted that there is some question as to when this transformation will occur.
A recent study completed by industry consultants Infonetics Research found that out of 225 respondents, nearly 60 percent of companies said they would not integrate or didn't know if they would integrate their voice and data network traffic by November 2000.
"Until these products can be proven to be reliable, people are not going to move over," said Mike McConnell, an analyst with Infonetics. "There's got to be a compelling reason."
McConnell said it will likely take "four to five years at least" for Internet-based voice capabilities to gain broad acceptance, with small businesses leading the change because they don't have any older infrastructure with which to contend.
The strategic moves among various companies now are in large part an acknowledgement of what is to come, rather than an indication of short-term revenue opportunities, according to analysts.
In related news, Nortel released more product details on its high-speed optical networking technology, originally disclosed last month and scheduled to be available next year.
The company also announced a deal to license equipment from Jetstream Communications that allows voice calls to share a digital subscriber line (DSL) with Internet traffic. Nortel also said it also contributed to the privately held firm's latest round of funding.
In addition, Nortel rolled out the Verselar Switch Router 25000, a combination of hardware and software designed specifically for service providers that want to deliver a variety of services based on IP. The technology, combined with the Verselar TSR 45000 device currently in tests (a repackaged version of technology from start-up Avici Systems), shores up the company's high-end routing strategy.
News.com's Wylie Wong contributed to this report.