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Routing

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

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paolo.franzoi 12/5/2012 | 2:52:34 AM
re: Alcatel Router Revenues Surge
So is the phone network unmanageable due to all the point to point connections? Of course not.

ATMs failings were the requirements for PhDs to configure the QoS requirements of a complex network. Additionally, the topology management function of PNNI was overly cumbersome. Finally, ATM boxes were never tuned for Access. They simply just pushed core boxes out to the edge (see additionally Cisco routers moving from Core to Edge).

I believe there is room for both Layer 2 and Layer 3 products. Layer 2 is effective in Access and Aggregation. Layer 3 provides a segmentation which allows these Layer 2 areas to be managed in an effective way. Layer 3 folks are also unwilling to sell their products as commodity pieces of hardware.

Imagine what would happen to Cisco if software was free, and software upgrades were free for 10 years. This is the world of access.

seven
Stbl 12/5/2012 | 2:52:34 AM
re: Alcatel Router Revenues Surge
The 7450 is perhaps debatable though it certainly routes with OSPF/ISIS support and it runs Ethernet over MPLS. It supports Etherent and SONET/SDH interfaces.

The 7750 is a full on router with all the interfaces and scalable BGP, Multicast and 2547. And the 7750 is winning some big deals if you read the releases.

Bottom line: ALA has routing and JNPR/CSCO must be feeling the heat. About time.
sigint 12/5/2012 | 2:52:33 AM
re: Alcatel Router Revenues Surge tmc1:
anything that forwards at L2 based on MAC addr is a switch
_________________-

Sorry to split hair - but isn't bridging the historically correct word for this function?
light-headed 12/5/2012 | 2:52:33 AM
re: Alcatel Router Revenues Surge "They have to stay innovative, like Juniper in its earlier days."
-----------------------------------------------

The implication being that Juniper is no longer innovative. NO, that's not possible. They wouldn't be behaving more like a certain large company on Tasman now...

;)
light-headed 12/5/2012 | 2:52:33 AM
re: Alcatel Router Revenues Surge Sisyphus,

I really agree with you if you are talking about all the garbage that companies like BT, Nortel and the ITU/IEEE are trying to add to ethernet like Traffic Engineering. Most of it is terrible and needs to be ignored. You can understand why the bellheads want to do it - more complex, turn ethernet into atm because they have already done as much damage to mpls as they could, etc.

Nortel, of course, wants to continue to change the playing field and start over because they missed the boat and cannot compete with other products based on implementation of standard features. Nortel's whole data strategy seems to be just keep trying to move everyone to proprietary solutions that they have a head start developing.

When some technologist/bellhead at a company like BT gives them some attention it just makes it worse for everyone!
Sisyphus 12/5/2012 | 2:52:33 AM
re: Alcatel Router Revenues Surge > So is the phone network unmanageable due to
> all the point to point connections? Of course
> not.

Not really sure where you see the analogy to Eth L2 there. I don't see it at all. Fundamentally different network philosophy with a clear split between signaling and forwarding plane, ergo its simplicity. Circuit switching is L1 all the way through, my friend, *not* a packet technology. Telephony *solved* the scaling issue in an intuitively simple (albeit complex due to scale) way. The more functionality they keep adding to L2 Ethernet stuff to fit service provider aggregation infrastructures, the more it resembles IP with its somewhat awkward forwarding-control overlaps. The huge question is whether all the mechanisms that are being implemented to mitigate the (negative) effects of huge ARP tables are truly going to scale up... there's a reason why IP infrastructure routing protocols are what they are, only they had far more time to mature and stabilize. It is amusing to see the Bellheads are now building up stuff in a major scale with a lot of stuff that stands on questionable standardization ground and proven poor interoperability... but this is my personal opinion, I'd be summarily executed and shot in the neck if I voiced this in a meeting... :-)
konafella 12/5/2012 | 2:52:32 AM
re: Alcatel Router Revenues Surge When bridges evolved into multi-ethernet port devices, the start-up leaders in the segment (Kalpana, etc) had to find a fancy new term for their product so they coined the term "ethernet switch". Prior to that most bridges were bridging ethernet into serial WAN connections. When these new "all-ethernet" devices were coupled with cut-through forwarding modes, they didn't want to be lumped into the old "bridge" product category.

After all, as discussed here, it's easier to get significant market share when you define a brand new category, right?

kf
tmc1 12/5/2012 | 2:52:32 AM
re: Alcatel Router Revenues Surge signit,

multi-port bridging and switching have become synonomous... sorry if that offends your sensibilities. Other L2 technologies (ATM/FR) are also frequently referred to as switching technologies. Don't even get me started with L3 switching which is a really confusing term (remember BRouting?)

and yes, you are splitting hairs.

sigint 12/5/2012 | 2:52:32 AM
re: Alcatel Router Revenues Surge tmc1:
anything that forwards at L2 based on MAC addr is a switch
__________________

Sorry to split hair - but isn't bridging the historically correct word for this function?

Hopefully, correctly formatted this time.
matahari 12/5/2012 | 2:52:31 AM
re: Alcatel Router Revenues Surge Juniper is claiming the gain is due to M7i and
M10i moving to high-end enterprise. This statement
actually puts Juniper in a defensive.

- If M7i and M10i are considered enterprise, this
means their claim to have gained in enterprise
is not due to the J-series. This would seem
the J-series sales are disappointing.

- What happened to the M320, Juniper's new edge
multiservice box? Another indication the M320
has been a disappointment.

That's two duds out of two "new" products
from their router group.
<<   <   Page 2 / 8   >   >>
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