ATLANTA--Nortel Networks' two top executives believe each other's core focus can help the new combined voice and data equipment giant reach the promised land: a true multipurpose network.
In their first joint public appearance since the close of the merger of what were once Northern Telecom and Bay Networks, John Roth, chief executive of Nortel, and firm president David House shared the Networld+Interop industry trade show stage here to profess a devotion to so-called convergence, a trend that has swept through the networking industry with an unusually large show of abandon.
In the midst of this clarion call to combine voice, video, and data across a single network back-end, Nortel rolled out initial plans to integrate tools from both sides of the house, the first steps in what could be an involved strategy to offer truly "converged" equipment.
The new company, which combined the data expertise of Bay and the veteran voice experience of Nortel, is the most obvious example of how the use of networks is changing. Others, such as Lucent Technologies, Cisco Systems, Alcatel, and Siemens, among others, are also addressing this new opportunity, but no one has yet to make the $6 billion bet that Nortel has made.
Why is convergence so hot? Data-based traffic is thought to currently rival voice in many areas. But while voice traffic is expected to grow in the single digits, data traffic is expected to continue to boom, necessitating increased bandwidth and new ways to treat traffic as just another data "packet." Where once there were separate voice and data layouts, large network service providers increasingly see the need to merge them into one.
"We see a blurring already starting today," noted House in the joint address to a packed hall.
The two, dubbed at one point the "dynamic duo" by House, followed a similar convergence rave-up from Lucent's chief Richard McGinn. All are making huge bets that the need for equipment to facilitate this convergence will drive profits for years to come, though the first fruits Nortel rolled out are far from the real thing, according to some.
"Most of the next-generation products are 12 to 18 months away," noted Craig Johnson, principal analyst with the Pita Group, a Portland, Oregon-based market watcher. "I think they're a ways away from offering total [voice and data] solutions. All of them have to do it, it just takes time."
"Also, keep in mind that no one knows exactly what this voice, video, and data market is," Johnson added.
House and Roth noted that the merger and subsequent strategy to integrate products has been validated by the moves of competitors. "Since we announced this, it has been emulated by our competitors," observed Roth at a press question-and-answer session following the speech.
"Everybody's taking the baby steps to integrate voice, but the risk of not moving quicker is even greater," added House.
In conjunction with the pair's appearance, the company launched several efforts to convince the market that the company's post-merger efforts aren't all smoke and mirrors, including the following: