Alcatel Router Revenues Surge

(NYSE: ALA; Paris: CGEP:PA) has some numbers to back up the success it's claiming in edge routing, as the company plans to announce today that its market share surged in the third quarter.

Figures from Synergy Research Group Inc. show Alcatel's 7750 and 7450 models collected $88.8 million in revenues during the third quarter, up from roughly $35 million in the second quarter.

Yes, sales more than doubled in three months.

"That shocked a lot of people," says Ray Mota, the Synergy analyst behind the report. Mota queried some major carriers, though, and he says they're backing up the numbers.

"It's not a spike," asserts Basil Alwan, president of Alcatel's IP division. "This was the decisive quarter to the point where we are a head-on challenger" to (Nasdaq: CSCO) and (Nasdaq: JNPR), he says.

What has Alcatel particularly jazzed is that it took second place in Synergy's "IP edge aggregation routing" category, with 23.6 percent market share in the third quarter -- surpassing Juniper's 19.7 percent but still trailing Cisco's 45.9 percent. (See Alcatel Seizes #2 Position.) Alcatel's IP edge routing market share stood at just 3.1 percent after the first quarter of 2005.

But Juniper notes some extenuating circumstances. In the third quarter, Juniper's M7i and M10i routers were taken out of the service provider category and into the high-end enterprise category. So Alcatel's bump in revenues was accompanied by a decline in what Juniper was reporting: "We moved a substantial amount of revenue out of that category," a Juniper spokeswoman says.

She notes that Synergy still ranks Juniper second in all service provider edge routing, a superset of the IP edge category. Service provider edge routing in the third quarter was led by Cisco with a 48 percent share, followed by Juniper's 27 percent and Alcatel at roughly 14 percent, she says.

Note, also, that the numbers can be sliced up any number of ways. Alcatel's 7450 is an Ethernet box lacking full IP routing functionality. So some might argue it's not suitable for any "IP" category, although it's often sold in tandem with the 7750.

Even with such caveats, the numbers suggest Alcatel's IP division, launched after the TiMetra acquisition, has kicked into gear. Alwan claims the 7750 and 7450 have racked up 90 customers, 50 of them announced, with wins including (NYSE: BT; London: BTA), (NYSE: CHA), and (NYSE: SBC). (See Alcatel Picked for BT's 21CN, Alcatel Wins China Telecom Deal, and Scaling IPTV: Progress at SBC .)

Alcatel and Redback Networks Inc. (Nasdaq: RBAK) both appear to be on the rise in the broadband edge, says Heavy Reading analyst Rick Thompson. (See How Redback Won BellSouth.) Alcatel's port density and the integration of policy management have helped it in the video market, in particular, he notes.

Alcatel's recent strength in IPTV wins might have been a factor in Cisco's decision to acquire Scientific-Atlanta Inc. (NYSE: SFA), a move that could boost Cisco's prospects in service-provider video. (See Sci-Atlanta: Cisco's IPTV Lifeline?.) But Alcatel officials note that triple play wins account for only half their router revenues, implying the 7750 has proven attractive in normal routing cases as well.

Alcatel may have to work hard to maintain its presence in the IP edge. "That space is extremely challenging," Mota says. "They have to stay innovative, like Juniper in its earlier days."

Alcatel is trying. The company has been adding software features to the platforms and has increased Layer 2 support on the 7750. (See Alcatel Adds to MSE , Alcatel Enhances IP Tech, and Alcatel Taps Layer 2.)

— Craig Matsumoto, Senior Editor, Light Reading

<<   <   Page 3 / 8   >   >>
light-headed 12/5/2012 | 2:52:14 AM
re: Alcatel Router Revenues Surge of course no Ethernet switch has to know anything about VLANs to be am "ethernet switch" (I buy Ethernet switches all the time that know nothing about VLANs)


You are adding ambiguity to something that at a technical level is pretty unambiguous. Those Ethernet Switches you buy are either Hubs (not Switches) or actually "vlan-centric" in which case they only support 1 vlan/broadcast domain which is untagged.

While there are some products that blur the lines many of the products clearly fit one category or another. L3 switches seem to cause the most blurring. I agree with you that the 7450 is absolutely a router by most criteria. (Juniper and Cisco will do their utmost to make this unclear and push it to another category - They don't like competition on their turf)

Which just points to the bigger truth that there is a very small number of things a product has to do to technically past the test of being an "ethernet switch" or an "IPv4 router".

And hence the fight about whether something is a switch or a router is interesting, but ultimately not as important as a discussion of what features are needed for any given application.

Agreed. However, it is very much in the interest of some to blur the lines to discredit the competition or force their revenue to show up in a different category. This has been a non-issue in the technical community. However, the analyst community with the help of vendor marketing have come up with some very creative differentiations to help sell reports and have made the waters a little murkier in the process. The techies ignore these reports because they are just a business/marketing execise. Those less knowledgeable, get confused by them.
Mark Seery 12/5/2012 | 2:52:14 AM
re: Alcatel Router Revenues Surge Turing,

I agree terms can be confusing, connection-oriented, connectionless, switch, router,.... so while they are helpful when communicating within a context (for example a community) that uses them the same way, in a forum such as this the participants appear to be so diverse that they actually get in the way of communication.

I fully understand why you would say that if something inspects IP packets (and forwards based on the addressing etc) then it is a router, but it is a particular type of router, an IP router (specifically if it conforms to RFC 1812 - perhaps one of the best documents ever written - it is an IPv4 Router). The term "router" could be used generically with respect to other protocols, as can the term switch (and the requiremets of such products would vary accordingly).

But to say something is a switch if it does not (do IP-based forwarding), is simpy to reference an accepted usage, not a provable fact. Also your use of L2 and L3 hints at a context in which you operate - not a critcism, just pointing to a frame of reference from which you are viewing the problem (for example, when talking about products that support Ethernet over PWE3 over MPLS over Ethernet or even IP over MPLS (or IP+MPLS if you prefer) over Ethernet the issue of talking about L2 and L3 is somewhat more complex. Likewise when TMC1 talks about something being VLAN centric, he is referencing a view of what in his/her opinion the market has accepted as being a switch - of course no Ethernet switch has to know anything about VLANs to be am "ethernet switch" (I buy Ethernet switches all the time that know nothing about VLANs) on the other hand some people would not buy an "ethernet switch" for some applications if it does not. Which just points to the bigger truth that there is a very small number of things a product has to do to technically past the test of being an "ethernet switch" or an "IPv4 router". There is a much larger number of things a product has to do to pass the buyers test of whether they would use any given product for any given application, and that test will vary depending on the application. And hence the fight about whether something is a switch or a router is interesting, but ultimately not as important as a discussion of what features are needed for any given application. it is obviously also important to understand of all the things a product technically supports, what of those many options are being used in production networks.

So to talk in terms I hope you can relate to, many IP/MPLS routers built for carrier networks are not "Ethernet switches", even when they implement VPLS. While VPLS emulates an Ethernet network (over another network), these products do not have the same default behavior, for example since they support so many different modes of operation, you have to select one on a port, and potentially do a great deal more configuration, before anything gets forwarded, whereas with a simple Ethernet switch you just plug things in and the devices find each other and start talking. Additionally, in some cases they do not perform a relay function (an option on some implementations) so they do not pass the IEEE test; and that does not even start to address various disagreements about filtering etc.

Also with respect to the term "switch" the industry struggles to understand what to call modes of operation based on MPLS label switching. Some will argue it is switching, some will say it is IP/MPLS routing, some will refer to fairly meaningless terms such as layer 2.5 (which is a reference to being a shim between two other layers - but does not really illuminate the role of that shim). I know this is a wish-washy nuance, but in my opinion, some modes of MPLS operation are very similar to IP routing, and some modes of MPLS operation are similar to ATM switching, so you just can't say a product is a router or a switch based on the fact that it supports "MPLS". You have to drive the industry to consensus (not there yet) or you have to be more specific about the mode of operation you are referencing.

So just to make things even more confusing some products on the market support ATM-based forwarding and control planes, MPLS-based forwarding and control plane, IP-based forwarding and control plane, and arguably PWE3-based forwarding and control plane. So there may be some products on the market you can look at and confidently say that is a "switch" or that is a "router", but there are others you can not. Most of these other types of products are made for large operators. But even in the enterprise market it is not always cut and dry, especially if you consider that even though a "switch" for a given vendor might have a worse "router" functionality than other products that same vendor makes, it still might have better "router" functionality than other products on the market, and more to the point the "router" capabilities might be perfectly adequate for some tasks.
Mark Seery 12/5/2012 | 2:52:14 AM
re: Alcatel Router Revenues Surge light-headed,

products that learn thousands of MAC addresses and forward based on a learning process are not hubs - by definition. if you want to suggest that they are internally a 1 VLAN broadcast domain, fine. the point is, "Ethernet switches" come in many shapes and sizes.

every segment of this industry fuzzy things up for self interest, famously even the "techies" during the bubble. analysts are no exception of course. however, the inference of your statements is you can never learn new insights by looking at a market a different way, is IMO, false. and demonstrably false. because even a single operator buys different routers, switches, ADMs, SBCs, WDM terminals, for different purposes. that there is a constant desire to find a way to differentiate is a given. to suggest that analysts never have to change the way they look at a market due to changing conditions is false. you have to look at every situation and judge it on its merits.
desiEngineer 12/5/2012 | 2:52:15 AM
re: Alcatel Router Revenues Surge BGP vs. the phone system. Boring.

Juniper #2 vs. Alcatel #2. That's a lot more relevant and interesting. Can we dice the IP Edge in a more significant way so that Avici can come in #2?

Is there something we can do to make BATM #1?


Ps. There was this one article I read that said Juniper said they wuz still #2. It made Juniper sound so defensive. Hilarious.
Sisyphus 12/5/2012 | 2:52:15 AM
re: Alcatel Router Revenues Surge
Seven -

you paint a picture of perfection when it comes to the telephone network numbering. The fact is that if you look at its history it had its very painful scaling issues. They had to exentd the numbering range, the area code splits were hell to implement and made numbering schemes less transarent, and mobile networks right now continued the trend.

I would disagree that IP Addressing and phone numbering set out to solve the same problem. IP was *not* desinged to address worldwide, universal connectivity - I don't think that was the initial vision, but of course I am one of the few that didn't invent the Internet! :-) But one should point out the phone numbering scheme started off as a static thing and you got your number and phone assigned whenever it pleased your operator. And why is North America "1" and, for example, Spain "34", why is that so natural? I think it's through force of habit.

Granted IP Addressing is less intuitive, because its hierachy seems less transparent for most, and it started off somewhat compromised space-wise. And while IP6 may provide some more transparency, I don't expect it to be *that* easy to be, either. Anf honestly, as long as devices get an address I don't care all that much what it looks like if I can abstract it and ideally call it by a true name, something the phone network doesn't do. But this is all a bit of a philosophical discussion.

That said, MAC addresses should be even worse as an addressing scheme for a public infrastructure, no?
konafella 12/5/2012 | 2:52:16 AM
re: Alcatel Router Revenues Surge Seven, a couple of points to consider. You certainly have the proof in the pudding (and not in the eating, YR ...) and nobody can argue that.

But the complexity of our NANP has to be much greater now than it was 20 years ago with the impact of LNP (and all the complex SCP call intervention stuff that goes on behind the scenes). I would think that the administration of LNP must be eroding the "simplicity" advantage of PSTN's NANP (and global equivalents) over BGP, no?

And with all the access-independant VoIP services being offered now, the area code and NNX (uh, or was that NXX?) are very much decoupled from the lcoation of the user - they really only indicate the location of the PSTN gateway. So your location based argument is less compelling than it might otherwise have been.

The mobility aspect certainly complicates matters. Will make for some interesting dialogue, no doubt.

paolo.franzoi 12/5/2012 | 2:52:17 AM
re: Alcatel Router Revenues Surge
The IETF may lose the argument to the UN. And recall Judge Green did not put in place country numbering which impacts the International community.

My point is simply this. It is a choice in evolution. The fact that the Internet evolved as an ad hoc institution makes it have certain postives and negatives. But the reality is it is solving the exact same problem that was solved by the phone network. It solved this problem with the constraint that their needs to be no central function that will make the network inoperable when part of it is blown up in a nuclear blast.

Now, people can defend history and how we got there from here. My point stands: BGP is more complicated than country codes and area codes. I disagree that it would make routing more complicated and less scalable. The phone network, which includes every cell phone has existed before and at greater scale than the Internet. So, I have an existance proof of what I am saying.

People may not like the existance proof. They can argue lots of things. But at the end of the day, phone calls are made.

Unfortunately, there is a lot of religion here. Lots of rebellion against something that was already in existance. And rightly so. But one can not deny the working nature of it.

Tony Li 12/5/2012 | 2:52:19 AM
re: Alcatel Router Revenues Surge

Yes, it is in the phone network. The phone network is not a good analogy for the Internet from a routing perspective. The phone network, for example, was developed in a monopoly situation where the topology was well controlled. Subsequently, Judge Green put regulation in place to ensure that the topology of the network conformed to the original addressing plan.

The Internet is not so controlled and without regulation you cannot constrain the topology to match the addressing imposed by the area code. Thus, the routing information would have to expand to carry exception information that would effectively negate any scalability benefit from the area code.

Thus, as I said before, area codes would make BGP simpler, but they would actually make the Internet routing architecture more complicated and less scalable.

This topic has been endlessly debated in the IETF and the rough consensus from the routing area has been quite clear.

'You can make addressing match topology or make the topology match the addressing.' -- Yakov

paolo.franzoi 12/5/2012 | 2:52:20 AM
re: Alcatel Router Revenues Surge

See the phone network. It exists and has standards. Done.

uguess 12/5/2012 | 2:52:21 AM
re: Alcatel Router Revenues Surge >My statement (which you agree with apparently) is
>that Area Code routing is simpler than BGP.


If you are so sure, why not propose it at the IETF and show us the details?

<<   <   Page 3 / 8   >   >>
Sign In