Last year saw a rash of specialized multiservice edge routers being launched in response to carrier requests. But now it appears the market for these routers won't hit high volumes until next year.
"It hasn't evolved like we all thought it would," says Scott Stevens, vice president of system engineering at Juniper Networks Inc. (Nasdaq: JNPR). "It's what [carriers] said they wanted, but they haven't been proving it with their wallets."
Stevens was talking mostly about the legacy Layer 2 market -- where multiple networks of Asynchronous Transfer Mode (ATM) or Frame Relay traffic would join into a single Internet Protocol (IP) core to be carried by Multiprotocol Label Switching (MPLS). But some in the business are saying the multiservice edge in general is off to a slow start.
"It hasn't really panned out like people had hoped, partly because some of the capability can be done by using [previously released products from] router vendors like Cisco [Systems Inc.] (Nasdaq: CSCO) and Juniper," says Mark Seery, an analyst with RHK Inc.. "But the bigger issue is that the migration, moving people onto common edge platforms for Layer 2 and Layer 3 services, has not happened at the big incumbent vendors yet."
So many carriers preached the multiservice edge that the concept got its own abbreviation: MSE. Vendors, besides Juniper, pointing products at the MSE have included Alcatel (NYSE: ALA; Paris: CGEP:PA), Ciena Corp. (Nasdaq: CIEN), Hammerhead Systems Inc., Laurel Networks Inc., Lucent Technologies Inc. (NYSE: LU), Nortel Networks Ltd. (NYSE/Toronto: NT), Riverstone Networks Inc. (OTC: RSTN.PK), and Tellabs Inc. (Nasdaq: TLAB; Frankfurt: BTLA).
Some of those vendors' systems, such as Juniper's M320, were crafted specifically for the MSE. Nortel built its MPE 9000 router, internally called Neptune, to handle the edge-router requirements the company was hearing from carriers. Lucent likewise put its CBX 3500 out with an eye toward this market (see Neptune Arrives and Lucent Joins the Edge Crowd).
One notable company that didn't build an MSE box was Cisco. Officials there have insisted the 7600 and GRS 12000 routers, already targeted at the edge, are good enough for the MSE market.
Carriers are definitely interested in the unified IP core, and they're anxious to move traffic off their old networks (see Executives Converge on Convergence). So why wouldn't they jump at buying MSE routers?
For starters, some believe edge-router spending has taken a back seat to glamorous access projects such as SBC Communications Inc.'s (NYSE: SBC) Project Lightspeed or BellSouth Corp.'s (NYSE: BLS) IPTV buildout (see SBC Sheds Light on 'Lightspeed' and Alcatel, Redback Score at BellSouth).
"Broadband represents a way to generate new revenue," says one equipment-vendor executive, requesting anonymity. "The MSE, at the end of the day, is more a cost-reduction strategy and is more about selling to businesses." With most businesses "fully served," it's easier for carriers to focus on consumers, who can be tantalized with promises of video and real-time gaming, the source says.
That doesn't mean the MSE market is dead. It's just not likely to accelerate until 2006, says RHK's Seery.
Part of the problem has been money. "Certainly in North America, the IXCs couldn't spend as much as they would like because they were having financial problems, and the consolidation is going to clear up those issues," Seery says -- referring to the announced mergers of AT&T Corp. (NYSE: T) into SBC Communications Inc. (NYSE: SBC), and of MCI Inc. (Nasdaq: MCIP) into Verizon Communications Inc. (NYSE: VZ) or possibly Qwest Communications International Inc. (NYSE: Q). (See SBC to Buy AT&T for $16B, Verizon Wins Tussle for MCI, and Qwest to MCI: 'Pretty Please?'.)
Carriers may also face the problem that some customers don't care about migrating to this newfangled network -- particularly if their telecom services are working just fine.
"Moving customers onto the new service networks is ultimately up to the customer and not the carrier, unless you can do it in a transparent way," Seery says.
For some MSE router vendors, the wait is apparently too much. Network Equipment Technologies Inc. (net.com) (NYSE: NWK) is shifting its emphasis to enterprises rather than carriers, and Laurel seems to be putting more focus on its broadband remote access server (B-RAS) capabilities (see Net.com: Back to the Enterprise and Laurel Looks to Europe).
— Craig Matsumoto, Senior Editor, Light Reading
For more on this topic, check out:
- The Heavy Reading report:
— Next-Generation Routers: A Comprehensive Product Analysis
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