Nortel tailors Alteon firewall to company size

Nortel Networks Corp. Tuesday announced the release of three new models of their Alteon Switched Firewall system. The new models -- the Alteon Switched Firewall 5710, 5408 and 5100 -- are currently available from Nortel and are being marketed to customers ranging from service providers down to small and medium-size companies.

The new models, which use Check Point's FireWall-1 Next Generation software, are intended to offer flexible security options to customers with a wide range of users, bandwidth, and security needs.

The Alteon Switched Firewall 5710, for example, is being marketed to large enterprises and service providers and offers more than 4G bps (bits per second) of throughput, 32,000 sessions per second, and support for up to one million concurrent sessions. The Alteon 5100, on the other hand, is a low-end, nonaccelerated switched firewall for organizations in need of basic firewall protection, according to the statement.

The announcement is the latest in a series of moves by Nortel to court the enterprise hardware market, which is dominated by Cisco Systems Inc. of San Jose, California.

In September, the company unveiled its Unified Security Architecture program, an effort to sell customized and scalable network, application, and management security products to enterprise customers.

In October, Nortel announced that it was restructuring its organization and introducing a new business unit focused exclusively on enterprise networks, among other changes.

"The problem Nortel faces is that the enterprise market for firewalls is pretty well understood and pretty well set," said Laura Koetzle, an analyst at Forrester Research Inc.

"Companies like Cisco, NetScreen (Technologies Inc.), Nokia (Corp.), and Check Point (Software Technologies Ltd.) pretty much have the enterprise firewall market figured out. And, while I have no doubt that (the new Alteon models) are good products, they're going to have to severely undercut the existing players on price in order to get a piece of the market," Koetzle said.

Nortel built its reputation as a supplier for large infrastructure companies such as phone, telecommunications, and service provider companies. As the fortunes of those companies rose during the bull market of the 1990s so did Nortel's, which commanded a per-share price of over US$75 at the height of the Internet bubble in the spring of 2000.

However, the collapse of the telecommunications sector has hit Nortel's sales hard, with most telecommunications companies eliminating jobs and severely restricting spending on new hardware. The company lost a total of $24 billion in 2001. In addition, Nortel posted a net loss in the second quarter, ending June 30, of $697 million, compared to a net loss of $16.64 billion, in the second quarter of 2001.

As of Tuesday, Nortel's stock price was trading at around $0.50 per share.

And while Nortel's firewalls may offer customers an advantage in terms of the flexibility and performance over some of its competitors, analysts say the company will have to do more to woo customers away from companies that already have a strong foothold in the enterprise market.

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