By Network World Staff In 2000, Nortel Networks solidified its No. 1 position in optical networking. To do so, the company plunked down almost $5 billion to acquire two optical companies, Xros and CoreTek, and it invested $1.9 billion to more than double the production capacity for its optical components and optical Internet systems production business. Nortel expects more than $10 billion in optical sales in 2000. Some other strong moves came in the content network and voice-over-IP arenas. In response to Cisco's $5.7 billion acquisition of ArrowPoint Communications, Nortel laid out $7.8 billion for Alteon WebSystems, the market leader in Gigabit Ethernet Web switches. This instantly gives Nortel the top spot in this burgeoning market. In voice over IP, Nortel closed a $1.4 billion deal with Cable & Wireless to manage the build out and operation of the Cable & Wireless voice-over-IP network. It will be the largest implementation of Nortel's Succession voice-over-IP product line. Nortel is also moving aggressively in wireless. In 2000, the company announced the "Wings of Light" initiative to marry its optical networking prowess with mobile wireless technology. Wings of Light includes an alliance with Hewlett-Packard to develop wireless Internet access products and create mobile e-services, as well as software to maintain users' Internet connections as they roam. Nortel plans to be the No. 2 vendor in wireless in 2001, predominantly in Third-Generation wireless, which is optimized for data. Another hallmark of 2000 was Nortel's acquisition of Sonoma Systems, an integrated access device maker. The bold $540 million acquisition bolsters the managed services products portfolio Nortel offers to its service provider customers. Yet, significant challenges are ahead for the telecom equipment giant. Nortel has virtually no carrier-class IP offerings, despite spending $7 billion two years ago for Bay Networks. Nortel killed its Versalar 25000 Internet core router and will instead resell Juniper Networks' WAN routers. The company plans to integrate IP routing into its OPTera Packet Core IP/optical switch, which is expected to debut in 2001. The enterprise market continues to lag for Nortel as well. Enterprise is stuck in the single-digit growth range each quarter, while optical, wireless and WAN switching grow in the high double digits. What little growth Nortel gets out of the enterprise comes from the company's customer relationship management application software offerings, not from its data network infrastructure portfolio, which it also obtained from Bay Networks. Some analysts say a shake-up is in the offing for Nortel's enterprise group to reignite growth. Related links
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