Cable Tech

Cisco, Nortel: CeBIT No-Shows

HANNOVER, Germany – CeBIT 2006 – This year's monumental, 26-hall show in snowy Hannover has two things amiss: Cisco Systems Inc. (Nasdaq: CSCO) and Nortel Networks Ltd. .

Hall 13 is missing a significant amount of land mass with the absense of Cisco. So what's the deal? Did the company, as one Juniper Networks Inc. (NYSE: JNPR) staffer suggested, "forget about CeBIT this year"?

Not so, says Cisco. It's here on some partner stands and is, instead, holding a Cisco Expo in Berlin in May. "We feel we get more value from that type of activity," says a spokesman.

Nortel has the same view. It is here with partners and has a stand with its joint venture partner LG Electronics Inc. (London: LGLD; Korea: 6657.KS) but is reviewing the way it looks at "live brand communications," says a member of the vendor's events team, and later this year will do its own expo event in Germany.

Meanwhile, competitors like Juniper are surprised and delighted in equal measure, as this is still a major event in the European telecom and major enterprise calendar. So what else is new? Here's a rundown of some news snips.

  • A year after talking about providing hosted VOIP for service providers, Lucent Technologies Inc. (NYSE: LU) has announced just such an engagement with Sprint Corp. (NYSE: S) to host and manage its Sprint IP Voice Connect service that includes local, long distance, traditional PBX, and Centrex services for enterprise customers in the U.S. and internationally. (See Lucent Pushing Services.)

  • Thomson S.A. (NYSE: TMS; Euronext Paris: 18453), which has been acquiring its way deeper into the telecom market, announced a number of new products and enhancements today, and said it was on course to generate €1 billion in revenues in 2006. When it acquired softswitch firm Cirpack in April 2005, the company said it was aiming to double its revenues from €400 million as part of a two-year plan to make a mark in the telecom sector. (See Thomson Buys IPTV Player and Thomson Buys Cirpack.)

    Today the French firm announced some new residential gateway features and DECT phone products, and enhancements to its IPTV middleware platform, Smartvision. The firm is a major player in the emerging home gateway segment and has developed a home hub with BT Group plc (NYSE: BT; London: BTA). (See BT Gets a Gateway and Home Gateway Group Puts on Specs.)

    But can Thomson deliver to the Home Gateway Initiative (HGI) 's target of a product at just €70 per unit? (See Telcos, Vendors Battle Over Gateway.)

    Yes, says Bruno Fabre, CEO of Thomson Telecom, though it will take some time before any company can deliver to the full expectations of the carrier-led HGI, which is still formulating its specifications.

    Thomson also today unveiled a new line of IP set-top boxes, the IP2000 series, that incorporates support for MPEG-4 Part 10, the new iteration of the compression codec also known as AVC and H.264 that, the IPTV sector believes, will help bring MPEG-4 into mainstream deployment. That's important for service providers, as MPEG-4 allows about twice as many streams of standard definition video to be delivered across a broadband connection as the widely deployed MPEG-2 standard.

    The IP2000 series also supports high definition (HD), and, importantly, is based on system-on-a-chip technology that reduces the unit cost of the set-top boxes, an important breakthrough for MPEG-4 and HD-capable products. Thomson uses ST17000 silicon from STMicroelectronics NV (NYSE: STM) for its system-on-a-chip design.

    Fabre says this is Thomson's first system-on-a-chip MPEG-4 Part 10 IP set-top device (SOSMPFPTSTD) and that the unit cost is much lower now than before, though he wouldn't commit to any specific numbers. It will be commercially available in July.

  • The Home and Office Communication Devices division of Siemens AG (NYSE: SI; Frankfurt: SIE) also unveiled its SOSMPFPTSTDs today here at CeBIT, the Gigaset HD360 IP and Gigaset HD860 IP products.

    Other CeBIT news today includes:

    — Ray Le Maistre, International News Editor, Light Reading

  • stephencooke 12/5/2012 | 4:02:25 AM
    re: Cisco, Nortel: CeBIT No-Shows "But can Thomson deliver to the Home Gateway Initiative (HGI) 's target of a product at just Gé¼70 per unit? (See Telcos, Vendors Battle Over Gateway.)

    Yes, says Bruno Fabre, CEO of Thomson Telecom, though it will take some time before any company can deliver to the full expectations of the carrier-led HGI, which is still formulating its specifications."

    Here is the thing about dealing with big telcos giving you target pricing numbers... If you meet them they will want a lower number (usually long before giving you the order that justifies the volume discounts that you included to get to this pricing level in the first place). If you meet the lower number they will want a still lower number and so on, and so on, until you have no margin left. Once one fool says they can meet the price number, with the required functionality, the carriers will all use it as a hammer on the rest of the suppliers. This is how a market gets commoditized and why telecom suppliers are in the state they are in at the moment.

    Basically carriers are looking for a Walmart-style operating margin from their suppliers. How many suppliers are capable of/prepared to do this in the telecom world? Obviously not Nortel as Mike Z wants mid-teens for operating margin. Walmart is half that. Oh, and by the way, they want cadillac service and support with that for no extra charge.

    This is how companies die and the market is consolidated.

    chook0 12/5/2012 | 4:02:12 AM
    re: Cisco, Nortel: CeBIT No-Shows Having felt the hammer, I'd have to say you are 100% right.

    woodpecker 12/5/2012 | 4:02:12 AM
    re: Cisco, Nortel: CeBIT No-Shows Yes, you picked up the right points.
    High-Tide 12/5/2012 | 4:02:11 AM
    re: Cisco, Nortel: CeBIT No-Shows Spot On! In the Enterprise, where I work, it is exactly the same. Most exasperating for me are the support expectations you mentioned. Commoditization is fine for mass-produced items, but the last time I looked, they weren't mass producing support engineers. Those available are not working for free, either!

    The challenge is getting the customer to realize the value of the engineering and support, and be willing to pay the going rate for it. The end result of this failure is degradation in the reliability of the product and the human experience using the commoditized product.

    Recently, there was an excellent short article in Network World (not my favorite rag) about this subject, I think in GÇ£NetBuzzGÇ¥ or GÇ£BackspinGÇ¥ columns decrying the level of mediocrity people live with today in the consumer products we use. Further, the reality experienced, often frustration, vs. the nirvana promised in an all-digital world.

    Coming full circle to Carrier-grade or Enterprise level quality products, customers expect the same pricing model, but demand a level of service not supported in the current business model.

    What can one do about it?
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