NEC forges into uncertain switch arena
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NEC last week introduced a line of enterprise backbone Ethernet switches aimed at customers interested in IP-enabled voice equipment, network servers and high-speed, quality-of-service-capable LAN gear from a single vendor.
With an established U.S. customer base in servers as well as PBX and IP PBX phone systems, NEC is hoping that customers will also want to buy its network infrastructure equipment, phone systems and server hardware. Getting its new network products to ride on the coattails of its other offerings could be key for NEC, as many of the established leaders in the LAN switch market are struggling in the IP network infrastructure business.
NEC last year was fifth in terms of worldwide revenue among Intel-based server vendors, according to market research firm IDC, and in third place behind Nortel and Lucent in the U.S. PBX market, according to Phillips Group. The company is bringing its BlueFire switch line from Asia, where the products have been shipping for four years.
NEC's BlueFire 710, 720, 730 and 750 series switches can support hardware-based Layer 2 switching and Layer 3 as well as eight levels of QoS prioritization with support for 802.1p/Q and Differentiated Services, two technologies for prioritizing data packets based on what kind of application - such as e-mail, voice or Web browsing - they belong to.
The BlueFire products also have hardware support for IPv6, the newest iteration of IP that promises to be more secure and can support many more addresses than the current IPv4. NEC claims to be the only switch vendor with IPv6 and IPv4 supported on its silicon (see chart for individual product specifications).
Cisco offers support for IPv6 as a software upgrade to its IOS switch and router operating system.
Competition plentiful
The BlueFire switches will compete with large, chassis-based backbone switches such as the Cisco Catalyst 6500, Extreme's BlackDiamond, Enterasys' X-Pedition, Foundry's BigIron and Nortel's Passport switch.
NEC is also introducing its BlueFire IX5010 multiservice WAN switch-router for the edge of a corporate WAN. The four-slot chassis supports a variety of WAN line cards, such as ATM, packet over SONET, and T-1 and T-3. Eight-port 10/100M bit/sec and single-port Gigabit Ethernet blades are also available.
It could be said that now is not an optimal time to debut a network hardware business in the U.S., with studies from Merrill Lynch and Dell'Oro Group showing that IT equipment spending and the market for such gear will decrease this year.
A survey of CIOs in the U.S. by Merrill Lynch shows that IT spending will grow at 5.5% this year, down from its projection in January of a 9% growth rate. Dell'Oro expects that slowed spending will cause the Ethernet LAN switching market to shrink this year by 7%, the first reduction of that market.
While the outlook for network vendors is bad, one industry analyst thinks that companies such as NEC, which can offer combined server, switch and even IP telephony products, may be able to do better than those with fewer items on their menus.
"It makes perfect sense that they would sell that kind of gear," says David Passmore, research director at The Burton Group. Passmore says that Ethernet switches have become such a commodity that some customers might be more willing to go with products from server vendors if package deals were offered.
Examples of such vendors include Hewlett-Packard, which has sold network gear along with its servers for years, and Dell, which entered the LAN gear market last month.
NEC did not mention any specific server or telephony products it would bundle with its switches.
Passmore also says NEC might have a strong market in selling its switches to its installed base of PBX users who may be IP enabling their PBXs, or who are looking at server-based IP voice systems from NEC.
The BlueFire 700 series switches are available now and cost $378 per 10/100 port and about $1,800 per Gigabit Ethernet port.
The BlueFire IX5010 multiservice switch is also available now and starts at $8,500.
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