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Nortel's HDX is Here

Optical switch said to do it all -- Sonet/SDH, grooming, rings, mesh, whatever... Is the timing right?

March 19, 2002

3 Min Read
Nortel's HDX is Here

ANAHEIM, Calif. -- OFC 2002 -- Nortel Networks Corp. (NYSE/Toronto: NT) moved to silence its critics today by announcing that it is shipping the Optera Connect HDX optical switch.

In pure capacity terms, the product is impressive. Based on a switching fabric built with eight internally designed ASICs, the switch is designed to start at a 640-Gbit/s capacity and scale to a terabit using the same switching fabric. The line cards will also fit eight 10-Gbit/s ports each, say Nortel officials. Most line cards in optical systems these days only include four 10-Gbit/s optical ports.

In recent months, anticipation had been building about this large, do-it-all optical switch. Some analysts and the financial community have wondered whether Nortel could deliver the product on time -- and with the right customers (see Nortel's HDX: The Future Under Fire ).

On the face of it, the company looks to have gotten at least the first part right. The product is out in the first quarter of 2002, the original delivery date, and includes everything the company said it would.

"We've worked on this. Instead of making a lot of noise, we put our head down and we've delivered it on time," said Brian McFadden, president of Nortel's optical long-haul division, in an interview here with Light Reading.

On the second theme -- the customers -- Nortel may have some more work to do. The first announced customer is Touch America Holdings Inc. (NYSE: TAA), a Montana-based carrier focusing on broadband fiber networks. The emphasis here is on "CLEC," which these days might as well stand for "company losing economic cachet" (see Carrier Crisis: Who's Most at Risk?). The two companies did not release the terms of the deal.

A Touch America spokesman, Cort Freeman, said the company bought the product to consolidate a large collection of Sonet ADMs and digital crossconnects. He said the HDX will minimize the amount of labor inolved in manually managing that equipment, because the HDX allows those connections to be consolidated and provisioned electronically.

McFadden says Touch America is a good pick because it was the first company to buy Nortel's vaunted 10-Gbit/s technology several years ago. He also says they're "doing well."

The fact remains, however, that Touch America's stock was today trading on Wall Street for $3.33 per share and had a market capitalization around $350 million -- not exactly an AT&T Corp. (NYSE: T). Nortel will have to announce larger accounts to gain credibility with the product

So far, Nortel has announced that Genuity Inc. (Nasdaq: GENU) is one of the trial customers, and it says that it has another. This customer may be Bell Canada (NYSE/Toronto: BCE), according to a source inside Nortel's booth here at OFC.

Meanwhile, the optical switching space has cooled, as carriers cut back on large-scale optical projects. That may leave some people wondering if this massively scaleable optical switch is the right product for the wrong time. To Nortel's credit, that hasn't stopped other large players from moving into the market. Cisco Systems Inc. (Nasdaq: CSCO) was preparing an STS1 grooming switch; and, just last month, Lucent Technologies Inc. (NYSE: LU) announced plans for its LambdaUnite, an OEO grooming switch (see Cisco Preps Stealth Switch and Lucent's LambdaUnite Busts Out). That's in addition to optical switching pioneers such as Ciena Corp. (Nasdaq: CIEN), Corvis Corp. (Nasdaq: CORV), and Sycamore Networks Inc. (Nasdaq: SCMR).

Analysts have said the knocks against the HDX are the cost and size. Indeed, the size may be an issue. The product itself takes up two entire standard telecom bays -- although in its introductory configuration the bottom half of the two bays remain empty.

Regardless, the scaleability and flexibility of the product left McFadden feeling bullish: "You can use this to consolidate 16 bays of ADMs. That's the kind of business case that customers are looking for."

— R. Scott Raynovich, US Editor, Light Reading
http://www.lightreading.comFor more information on OFC 2002, please visit: www.nottheofc.com

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