Nortel Networks Corp. Friday said it has discontinued its OPTera Packet Core (OPC) terabit router for the Internet core, citing lack of demand and the distraction of its internal restructuring as it seeks to regain profitability.
Today's disclosure confirms month-old speculation that the product was dead following published reports of Nortel cutting half of OPC's development staff. It is also further indication that despite spending US$7 billion to acquire No. 2 router vendor Bay Networks Inc. three years ago and attaching the word "Internet" to every facet of its operations, Nortel has little if anything to offer in carrier-class IP routing.
"We are discontinuing the OPC development program, and we are redeploying the majority of the remaining OPC resources within Nortel Networks," said Christina Warren, Nortel director of media relations, in a statement. "This decision reflects our revised priorities for the Intelligent Internet portfolio, reduced market and customer demand today for a multi-terabit switched router; and our focus on Nortel Networks Alignment Plan."
Warren said a "small team" will continue to work on elements of the now-discontinued program that the company believes "to be of value to our customers and our revised strategy."
Warren said Nortel does not provide specific employee numbers for specific business projects, but a report in LightReading last month said Nortel cut OPC's development staff in half, from 400 to 200.
"Anything that is not maturing to fruition and sold in a reasonable amount of time is gone," says Frank Dzubeck, president of consultancy Communications Networks Architects in Washington, DC. "They're taking a knife and going through everything that's not going to produce immediate revenue."
Warren said Nortel will continue to address customers' current and evolving needs through:
MPLS-enabled Passport 15000 and 7000 multi-service switches, the Shasta 5000 Broadband Service Node IP subscriber management switch, and the OPTera Connect optical and photonic switches"Service edge" platforms that include the Multiservice Edge (Passport 15000), the IP Services Edge (Shasta), and the "new Ethernet Edge," which Nortel will address with the Passport 8600 Layer 3 switchPartnerships with "industry leaders" that will bring together these capabilities, and the innovations that occurred as a result of the OPC development program, such as the SmartOS agents that will allow core routers to interwork with Nortel's long-haul optical systems and switching fabricsOne of those partnerships is the year-old resale relationship Nortel has with Juniper Networks, an arrangement that, until now, was viewed as a stopgap until Nortel could get OPC out the door. OPC was expected to ship last month or sometime this quarter.
Notably absent from the "customer needs" lineup was the Alteon Web and content switching portfolio obtained from Nortel's $7 billion acquisition of Alteon Web Systems a year ago. Analysts, however, say Alteon and Shasta are the only credible IP offerings Nortel has.
Nortel did not respond by press time as to why the Alteon products were not mentioned in Warren's statement.
OPC's death is the second major misstep in Nortel's attempt to be a player in carrier-class multigigabit/terabit routing. Last year, the company confirmed that it killed the Versalar 25000 after a lengthy delay in shipping the product and announcing the resale arrangement with Juniper.
The Versalar 25000 was discontinued because Nortel said it could not attain a better than No. 3 position in the Internet core router market behind Cisco and Juniper. Instead, Nortel said at the time, router logic from the Versalar 25000 would be integrated into the OPC.
Before that, Nortel scuttled plans to resell a terabit router from Avici Systems.
"You can count their missteps in this space," Dzubeck says.
Nortel is undergoing a wrenching restructuring in light of sharply reduced spending from its carrier customers. The company to date has laid off 23,000 employees and will lay off 7,000 more in the next eight weeks.
Nortel posted a second-quarter 2001 net loss of $19.4 billion, considered the largest quarterly loss in corporate history. And the company is exiting non-core businesses and bleeding executive talent at an alarming rate.
Nortel is also searching for a chief executive officer as current commander John Roth is stepping down in nine months.