Nortel Networks' sale of IP networking equipment to US carrier Verizon Communications suggests that phone companies are serious about IP, and that Nortel itself is on the mend, according to analysts.
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"It's a reassurance," said Forrester Research analyst Brownlee Thomas. "We were worried about Nortel a few years ago, wondering if they would survive."
Nortel said it had signed a letter of agreement with Verizon to supply it with Nortel IP switches and gateways.
The deal will help Verizon make the big shift away from old-fashioned TDM (time-division multiplexing) network gear to a packet-switched environment, which should increase network efficiency and novel applications for Verizon business and residential customers by mid-2004.
Verizon plans to purchase Nortel's Succession Communication Server (CS) 2000 softswitches, Passport Packet Voice Gateways, Succession Multiservice Gateway 4000s, Succession Media Gateway 9000s and Multimedia Communication Server 5200s. Nortel will be Verizon's exclusive supplier of VoIP infrastructure over the next three months.
The Verizon deal is "a step in the right direction for recovery", said Ronald Gruia, an analyst at Frost & Sullivan, adding, however, that it would take while for Verizon's switch to IP to come to fruition.
"This is not a process that can be done overnight. The whole project could take five to 10 years," he said.
Thomas said the Verizon announcement is a vote of confidence for IP. "The technology has clearly and definitively arrived."
The networking supplier is making headway with its core audience such as service providers like Verizon.
"The carriers are going to be turning to their established partners" when it comes to implementing IP, Thomas said. She added that Nortel correctly identified the carrier market's needs and focused on wireless and IP network gear.
The Verizon announcement comes more than a year after Nortel said it would change its corporate structure and create an enterprise division in an attempt to give corporate clients the same level of attention that carriers receive from the supplier.
The Verizon deal includes increased support for the carrier's enterprise sales force.
Verizon's enterprise clients have 13,000 Nortel Meridian PBX systems and 150,000 Nortel Norstar key systems ripe for upgrading.
Stefan Dubowski writes for ITWorldCanada.com