Nokia Siemens Networks Broadens Carrier Ethernet Portfolio with Acquisition of ATRICA

| Oct 29, 2007 | Carrier Infrastructure | Competitive Intelligence Report

| Analyst: Glen Hunt

Current Perspective: Positive
Vendor Importance: High
Market Impact: High

Event Summary

On October 25th Nokia Siemens Networks (NSN) announced its intention to acquire carrier Ethernet specialist ATRICA. The move positions NSN to offer broader end-to-end solutions that simplify and reduce the cost of Ethernet-based transport networks. The acquisition is expected to close by January 1, 2008. The ATRICA deal is a critical first step designed to strengthen NSN’s portfolio to compete with mega-rivals such as Alcatel-Lucent and Ericsson; however, the company provided few financial details.

Recommended Competitor Actions

• Alcatel-Lucent should highlight the market momentum it has established in the overall service provider edge market with the 7XXX-based product portfolio, as evidenced by capturing the number two market share position according to Synergy Research.

• Cisco should highlight the overall success and depth offered by the Cisco IP NGN product portfolio, which includes a broad range of platforms and solutions ranging from the IP core to the access layers of the network.

• Ericsson should highlight the integration work already underway based on the company’s earlier acquisition of Redback Networks, where it gained the SmartEdge series Ethernet access and edge router portfolio.

• Juniper should highlight the continued investment it has made in the carrier Ethernet market segment with the launch of the MX-series Ethernet service router product family.

• Nortel, which has spearheaded the PBT movement by establishing the carrier Ethernet ecosystem and actively moving it into the public eye via interoperability demonstrations and customer trials, needs to set up efforts to show that PBT/PBT-TE is making significant progress in the market and that it is also offering, through organic development or acquisition, innovative new products that address the cost and capacity needs of mobile and wireline operators.

• Other competitors such as Extreme, Foundry, Force10, Huawei, Tellabs, ECI, and others should point out that a one-size solution does not fit all operator’ requirements. Since carrier Ethernet is based on open standards (such as MEF-8, 9, 14), multiple vendors can participate with their best of breed solutions to deliver true multi-vendor flexibility that protects service providers from a single vendor lock-in and spurs continued competition and innovation.

Recommended End User / Customer Actions

• Current customers of both organizations should press NSN for a roadmap showing the strategic platforms that the company will support. Although there appears to be minimal overlap in the product portfolios, service providers should seek a commitment from the company regarding which products it will support on a strategic basis.

• Service providers should press NSN to provide a detailed roadmap that shows the integration of network and operational managements systems. Service providers should suggest that NSN take the best-of-breed features from each system and bring them forward. With OpEx becoming a strategic planning issue, the management suite can have a significant impact on network efficiency and recurring cost.

• Service providers should press NSN to expand its interoperability labs and test venues in order to leverage the expanded product set rapidly and gain confidence in the overall solution. With complex applications, mobile and wireline, assistance from the vendor will greatly improve test times and speed time to market for sophisticated services.

• Service providers should compare the end-to-end proposition for NSN with that of the major rivals such as Alcatel-Lucent, Ericsson, and Nortel to determine the best architectural model and best products to meet their service delivery needs. The ability to leverage components from multiple vendors will add a degree of flexibility and insure competitive solutions.

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Analytical Summary

Current Perspective

Competitive Positives and Concerns

Recommended Vendor Actions

Recommended Competitor Actions

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