The grass is always greener… Maybe that’s why traditional telecom vendors are targeting the enterprise for sales growth. As network requirements in the enterprise begin to match those in the service provider network in terms of resiliency and security, telecom vendors find that their products sell just as well into corporations
The grass is always greener…
Maybe that’s why traditional telecom vendors are targeting the enterprise for sales growth. As network requirements in the enterprise begin to match those in the service provider network in terms of resiliency and security, telecom vendors find that their products sell just as well into corporations.
The worldwide market for packet-based enterprise communications equipment is also twice as big as that for service provider equipment, according to Synergy Research. In the first half of 2004, the worldwide market for packet-based communications systems for enterprises was more than $11 billion; the same market for service providers was $5.4 billion, according to the firm.
That’s why Nortel is hanging onto its enterprise business, and why Juniper Networks and Lucent are expected to expand theirs.
Juniper made a forceful entry into the enterprise market with February’s acquisition of security vendor NetScreen. Juniper then followed that up with the launch of the J-series access routers in June. And many expect Juniper to acquire a presence in Layer 3 Ethernet switching — perhaps via Extreme Networks.
Juniper’s not expected to stop there, however. Many expect the vendor next year to also develop or acquire Layer 4-7 Ethernet switching and IP PBX capabilities, and perhaps wireless LAN and storage networking expertise down the road.
“We see significant opportunity in expanding the corporate networking and security side of our business,” Juniper CEO Scott Kriens said during a third-quarter earnings conference call two weeks ago. “The opportunity is growing.”
The company’s current enterprise VoIP strategy is to partner with IP PBX vendors such as Avaya, with which it is testing and demonstrating interoperability between the J-series routers, security software and packet PBXs.
But partnering may be a precursor to insertion.
There’s serious growth opportunity in the enterprise for Juniper partner Lucent, as well. Sales of Lucent’s network management software, Ethernet/SONET transport systems, VPN firewalls and Accelerate VoIP products grew 30% to 40% over the past year, and are expected to exceed that this year, according to Mark Wilson, Lucent’s enterprise sales vice president.
And this is five years after Lucent jettisoned it enterprise business, spinning it out and into the independent company Avaya.
Analysts expect Lucent to tap Juniper to further its enterprise ambitions by reselling the J-series routers and NetScreen VPN systems. Wilson says there is currently no arrangement with Juniper to sell enterprise products. But Kriens, in the earnings call, says all of Juniper’s partners – which include Siemens and Ericsson, in addition to Lucent – are “in some stage of evaluation” of the low-end of the Juniper’s router product line or its security products.
So perhaps Juniper and Lucent understood why rival Nortel retained its enterprise operations after many expected the company to disengage it this summer to make up a profit shortfall. Nortel CEO Bill Owens considered that but held on to it because the enterprise market is driving convergence — and service provider business.
Enterprise accounted for 22% of Nortel’s preliminary estimate of $2.55 billion in revenue for the second quarter, according to the company. That’s better than two of Nortel’s traditional businesses — wireline at 17% and optical at 10%.
