Voice over IP nicks Big Blue's niche

IBM's ultra-reliable, mainframe-centric networking system for large enterprises, Systems Network Architecture (SNA), is in demise, according to Cisco Australia's managing director, Terry Walsh.

And within two years, the SNA networks in all leading Australian banks will be non-existent or relegated to tiny niches, Walsh predicted.

Hastening SNA's demise is IBM's recent decision to phase out all its router and switch products over the next year in favour of Cisco System devices. It is paving the way for the internet's Internet Protocol networking technology to eat away even faster at traditional SNA sites such as the large financial institutions.

"If you go back 10 years, IP networks were not highly reliable or suitable to SNA traffic, which is sensitive to time delays," Walsh said. "What has happened is that IP has grown up and become reliable even for time-sensitive traffic, to the point we now carry voice over IP (VoIP)."

Cisco claims to own 75 per cent of the SNA-to-IP connectivity market, and its experience with tunnelling SNA traffic over IP networks has helped developed its VoIP technology, Walsh said.

With IBM promising support but no new features for its existing routers, Cisco is perfectly positioned to reap benefits from the ongoing migration to pure IP networks.

The cost of migration is not prohibitive for large enterprises when viewed in the context of their ongoing application and device upgrades, Walsh said.

"We already have large IP networks in all the major banks. What the banks are talking with us about now is not IP itself but voice over IP."

VoIP sales will account for 30 to 40 per cent of Cisco's revenues in two years, compared to 5 per cent now, Walsh estimated.

Internet service providers are showing strong interest in VoIP and the larger companies and government agencies are trialling VoIP. But the market segment moving fastest to adopt it consists of the second-tier carriers, Walsh said.

As a group, they stand to gain more from it than do the incumbent carriers, which will respond to the adoption of VoIP but won't drive it because of their existing voice revenues.

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