We have all been reading the various news articles on Nortel Networks announcement of moving into Bankruptcy Protection. There have been many opinions voiced, good and bad, about possible alternatives for Nortel’s future.
The International Nortel Networks Users Association (INNUA) represents more than 4,000 members and released a public statement pledging its support for the troubled network equipment maker, which filed for Chapter 11 bankruptcy protection in the U.S, Canada and Europe, amid a deadline to pay a US$107 million bond on last week.
“INNUA believes Nortel’s decision will afford the company the opportunity to truly focus on strengthening the business to meet Nortel customers’ current and future communications needs,” the statement said, as quoted in the Dec. 15th issue of Computer Dealer News.
At a recent FOX GROUP planning session, while discussing the possible alternatives facing Nortel, and the affect on end user customers, we came to the realization that perhaps Nortel is paying the price of convergence.
Let me explain what I mean by this statement.
In the previous digital TDM world, a phone system was selected and ran for anywhere from 15 to 20 years (or sometimes more) years, before being replaced.
In the IT world, computers are replaced every three to five years.
In the Datacom world, network gear is replaced every five to eight years.
Looking at the variable life spans of equipment above, it made us wonder if the move of telecommunications applications running on PC type devices at much lower cost for shorter periods of time was affecting Nortel and its ability to respond in a cost effective manner to this new paradigm.
The other point we discussed was the fact that many of their North American competitors made either carrier grade equipment or end user equipment. Nortel is one of the only ones that still makes both.
As many of our readers know, there is a great deal of difference between the two segments. Yes, they both transmit telecommunications information, but with very different requirements from a capacity, throughput and reliability perspective, as well as capital investment requirements.
In talking to the Nortel’s, Director of Strategic Enterprise Technologies, Tony Rybczynski, ”With the move towards ‘communications as software’, our products are evolving to be software plays. With our strategic relationships with Microsoft and IBM, our ability to have advanced unified communications offered as software-base premise and hosted solutions that can be easily integrated with business processes, positions us to be successful for the long term”.
Last analysis point…thinking from end-user perspectives, we believe that the value in Nortel is its client base and support revenue, its history and capabilities of designing and manufacturing well engineered products, and lastly, and we believe most important, its people!
We encourage industry and end user customers to at least give Nortel an opportunity to provide alternatives when considering new technology acquisitions and to renew maintenance contracts when the opportunity arises. Whatever happens in the future, these areas will be provided or supported by ‘people’ in the future.
We wish Nortel every success in their ongoing effort to restructure, determine its future, and come out the other side as the global competitor we know it can still be.
Tony Rybczynski: Tony is Enterprise Leader for Technology and Architecture for Nortel Networks.
I hope you have found our thoughts of value, educational, enlightening or at least humorous, and feel free me at Roberta J. Fox at Roberta.Fox@FOXGROUP.ca or 905.473.3369 x 1001 to discuss further.