Motorola-Nortel deal disses Cisco

In an unintended slight to business partner Cisco Systems, Motorola is collaborating with Cisco rival Nortel Networks to add IP (Internet Protocol) routing software to its processors.

The union is intended to let network equipment manufacturers develop Internet products using Motorola's PowerQUICC communications processors, and on Motorola PowerPC CPUs, as well as Nortel's Open IP Environment routing software. Motorola also plans to incorporate Nortel's Open IP Environment in its high-end CompactPCI computer systems. Nortel and Motorola intend to jointly promote Motorola PowerPC as one of the key strategic processor architectures for the Open IP Environment.

The deal did not sit well with Cisco, which has an ambitious partnership with Motorola around wireless Internet access. Last February, Cisco and Motorola announced a $US1 billion alliance to develop and deliver a framework for Internet-based wireless networks.

Cisco and Motorola later strengthened that alliance by jointly purchasing Bosch Telecom in Richardson, Texas, and forming a new company called SpectraPoint Wireless. In October, Cisco announced a partnership with 10 huge companies -- including Motorola -- to drive standards for broadband wireless Internet services.

In a conference call with Wall Street analysts this week, Cisco President and Chief Executive Officer John Chambers said he is "very concerned" and "disappointed" that Motorola chose to partner with Nortel.

"If they're partnering with our key competitors, you're really talking about (the wireless venture) becoming more of a transactional relationship as opposed to a strategic relationship," Chambers said. "Time will tell on which way that one goes."

Chambers' remarks caught Motorola off-guard.

"We were surprised by those comments," a Motorola spokesman says. "We're a semiconductor company and we do business with both companies. Even though they are competitors we have to maintain our relationships with both companies."

Cisco's IOS software has also been ported to Motorola's PowerPC and PowerQUICC devices but that development just hasn't been announced yet, the spokesman says.

"I really don't see how (the Nortel deal) would impact the wireless arrangement with Cisco," the Motorola spokesman says. "It shouldn't, anyway."

Nortel's Open IP Environment was announced in November of last year. It is designed to "Internet-enable" everything from servers and networking processors to set top boxes, mobility devices and personal computers. The software is based on industry standards for IP routing, and includes APIs (application programming interfaces) so developers can add authentication, security, encapsulation and tunneling, policy, network management and accounting application to it.

Motorola's PowerPC and PowerQUICC processors are designed for a range of communication applications, from small office/home office routers to high-end WAN (wide area network) and LAN (local area network) switch/routers, Motorola says. Combining the devices with the Nortel software provides a programmable environment for manufacturers to build next-generation Internet access equipment, the companies say.

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