Nortel Networks didn't just slash the price of its routers last week - it told the market: "Routers are dead." This amazing development will apparently result from Nortel releasing its Open IP Environment software, which will, it claimed, "commoditise old-world routers" and "redefine market economics". Open IP is a combination of Nortel's familiar BayRS with IP software purchased from Phase2 Networks in June last year. It includes IP functions such as routing, authentication and security, as well as IP applications such as accounting and policy-based management, said Nortel. Among the 75 licensees of the software, Nortel boasts heavyweights Intel and Microsoft. According to Nortel, Open IP can "internet-enable everything from servers and networking processors to internet appliances such as set-top boxes, mobility devices and personal computers". Jon Collins, senior analyst at Bloor Research, said he has been trying to work out how the release of another IP stack - albeit one including a full range of IP services - is going to destroy the router. "It's one thing enabling devices to connect to the internet, but products built purely to connect networks together are a different matter," he said. Devices which aggregate the Lan and connect it to the outside world - routers by any other name - are always going to be needed and it is not clear how Nortel licensing Open IP is going to take that market away from Cisco. "This is rather like trying to take Cisco's market away by saying it doesn't exist," said Collins. Steve Jenkins, vice president of business development at Nortel's European enterprise division, explained: "We're asking how we are going to move this fairly stagnant market along, which is dominated by our friends in Santa Clara (Cisco)." What Nortel has done will mean "the old router is being broken up into pieces and put into other devices". He added: "The router is no more." Jenkins said proprietary routers have been a barrier to performance and Nortel will make them obsolete by opening up IP services. "Corporate networks will be connected to the outside world by a switch that interfaces directly with the optical ring. Routing functions will be dispersed around the network, performed by devices running Open IP." Nortel will want the switches which corporate networks use to connect to the outside world to be Nortel products. Although it may well make an optical interface module available for its switches before Cisco does, it is unlikely its rival will be far behind. Cisco must be serious about optical after spending $7bn on optical developer Cerent. Chris Lewis, director of Yankee Group Europe, said Nortel is playing on the perception in the market that Cisco ties its customers to its products. "Nortel is playing the 'Open' card and painting Cisco as archaic and proprietary." Lewis pointed out that Nortel is not only after Cisco in the enterprise, but at internet points of presence such as ISPs. Here, Nortel has always tried to argue its optical switches will perform better than Cisco routers, but by releasing its IP software, Nortel can go further by trying to create an Open IP environment across the industry. At the time of going to press, the identities of Nortel's 75 licensees were not available. Many may be software developers, such as Microsoft, which intends to include APIs in Windows 2000 and NT4. Intel has announced it will use Open IP in its Internet Exchange (IX) Architecture and embedding Open IP in its network IXP1200 processors, made by Intel-owned Level One Communications. 'Siliconising' networking functionality greatly improves performance, but 'hard-wiring' programs means they cannot be changed. Programmable ASICs - chips built to perform a specific function very quickly, but which can still be reprogrammed - have emerged recently, and herein may lie Nortel's claim that Open IP will make Cisco's software-based routers obsolete, if embedded in such chips. The idea is to take away the constraints of hardware-based routing while beating the performance of software-based products. Intel agreeing to use elements of Open IP in its networking chips is no doubt a coup for Nortel, but it is not clear whether Intel is going to sell any of these chips to companies which make networking products with the potential to knock Cisco off its perch. That would mean companies which compete with Nortel in the network infrastructure market would start to use Nortel software. Open IP is already included in Nortel's own optical routing products. The company expects products from third-party developers to come to market within six months. Networking companies which support Intel's IX architecture include Cabletron, Newbridge Networks and Cisco itself. But Jenkins said routing functions will be performed by "devices distributed around the network". So instead of Nortel hoping that Open IP will end up in Lan switches, it may have a vision of routing functions being performed by the clients themselves - such as PCs, thin clients and servers. Jenkins spoke of "taking the access point out of the router and putting it in the device itself". If this is the rationale behind Nortel's move, then it is certainly playing a very long-term game. - When discussing the performance of Nortel's enterprise solutions group, John Roth, chief executive of Nortel, described it as "modest at best". He said: "We are looking to try to invigorate our own effort next year." But Jenkins said the router price cuts and release of Open IP are only a start. "In consultation with some of our channel partners, we are midway through completely re-engineering our route to market," he said. "We're going to take a different approach. The channel will still be at the heart of it, but we're going to change how we support our channel - what tools we give them - and also take another look at our direct-touch programme and make sure we're reaching the right enterprise customers."
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