Buoyant IP Growth

By Mark Evans | Published: August 20, 2007

According to a Dell’Oro Group report, shipments of IP lines in the second-quarter climbed 30% due to strong demand from small businesses, which is good news for suppliers such as Nortel, Avaya and Cisco that have been targeting the small business market with VoIP services.

“Vendors continue to broaden their VoIP offerings to small and medium businesses,” commented Alan Weckel, a senior analyst with Dell’Oro. “Vendors, such as Avaya, Cisco, and Nortel, continue to expand their development and sales efforts in order to better target smaller businesses with VoIP solutions. With recent product introductions and a renewed focus throughout the industry to sell VoIP solutions to small businesses, the migration to IP will continue to accelerate.”
Dell’Oro said Nortel continues to be the IP line shipment leader globally, while Cisco has surpassed Avaya in terms of line shipments in North America.

Source: Telecom Paper.

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  • Maximus

    Good Mark Evans. I am happy to see some positive news from you for a change about Nortel.

    Keep on reporting both the bad and the good and I may become your biggest fan ever.

    Cheers,

    Maximus

  • Observer

    North America MArketshare:
    Avaya 20.9%
    Cisco 20.9%
    Nortel 12.1%.

    http://www.redherring.com/Home/16909

    In the late-1990s Internet boom, Nortel dominated sales of fiber optics, achieving a $250-billion-plus market cap and becoming the darling of Toronto’s stock exchange. For several weeks in 2000 Nortel’s stock stayed above $80. The company has a century of heritage selling network equipment to phone companies.

    Since then it’s become so synonymous with hardship that its name has slipped into the analytical lexicon; pundits now deride similar poor performers for “pulling a Nortel.”

    industry watchers who have read the rise-and-fall-of-Nortel script before—and the nifty PowerPoint restructuring plans—already have their doubts about his aggressive schedule. Morningstar’s Mr. Slack calls the job a “mammoth undertaking.” Gartner analyst Bob Hafner says the 20 percent figure is unrealistic. “These are some pretty big markets, where not even the leading vendor has 20 percent,” he says.

    In a research note from UBS Investment, analysts wrote, “In key areas Nortel is far from being a 20 percent player. We believe Nortel management will have to commit itself to significantly alter its portfolio mix if it plans on being a serious contender in these tightly contested technologies.”

    There are challenges on both sides, Mr. Daichendt says. Tumultuous consolidation in competitors could give Nortel a short-term window to gain ground, though avoiding consolidation could also leave the company at a long-term disadvantage.

    Nortel alum Mr. Daichendt calls Nortel’s focus on IMS and WiMAX “very wise.” But WiMAX isn’t a sure bet. The well-hyped but hardly proven wireless technology has its detractors and staunch advocates, not least Intel, which remains its strongest proponent. But if the technology flops, it could be fatal for Nortel.

    “Nortel has delivered few market-leading technology wins in recent years.”

    “The firm is losing share across nearly every product line, and research and development has been unproductive for years,” writes Mr. Slack in a research note. Mr. Rosenberg is equally harsh: “R&D is the lifeblood of the industry. If you can’t lead with technology, you might as well get out of the business. Go sell hotels or something.”

    Mr. Hackney, who’s also in charge of Six Sigma, says there will be 250 to 350 Six Sigma “blackbelts” and “greenbelts,” as training program graduates are called.

    More likely, it’s the chance to play a key role in a $10-billion company that has a century of telecom heritage. Nortel’s Mr. Hackney admits he gets a big thrill out of turning around under-performing companies; Mr. Riedel says the sheer size of the challenge attracted him.

  • Maximus

    Mark Evans,

    Here is something I was hoping you would be the first to report, but it looks like FT.COM beat you up to it.

    Had you tried focusing more on the good (at least as much as you are focusing on the bad) at Nortel – you might have come up with the story before FT.COM did.

    IMHO Mark, as we progress in time there are going to be abundant success stories coming from Nortel field. It would be a shame if you miss reporting them.

    http://us.ft.com/ftgateway/superpage.ft?news_id=fto082020071519319812&referrer_id=yahoofinance

    Maximus

  • Casual Observer
  • Disappointed Shareholder

    I hope Nortel can make money on the Six Sigma graduates that Mr. Hachney is spending money on. Looks like the “new leadership” is still focused only on cutting cost vs winning market share.

  • Spotticus

    During the press event Balmer specifically addressed the question of the alliance with Nortel.

    “With Nortel, Nortel and we are working on the same thing, with Cisco we are working on things to compete and interoperate which is a different notion”

    I recommend that people watch the webcast. It’s a good video, lots of talk about competition between the two companies (specifically in Unified Communictions), the goal is more to interoperate rather than integrate with one another (i.e. Microsoft and Cisco will play well with each other for the benefit of customers).

    http://newsroom.cisco.com/dlls/2007/hd_082007.html#webcast

  • Casual Observer

    The fact that customers want Cisco and Microsoft to interoperate tells you one thing – that they see those two as the leaders in the enterprise. Nortel has been lacking a strong data portfolio the last 8 years and the press event only reinforces that. I think what we’ll see is more of the same – competitors of Nortel getting their piece of the growing market but Nortel getting less than the growth rate of the entire market.

  • Spotticus

    Have you actually watched the press event?

  • Casual Observer

    Spotticus, I read the stories online by doing Google news searches. That was more than enough to tell me that Microsoft is willing to do anything to keep the customer happy and that includes interoperating with Cisco.

    Cisco would be wise to scoop up Avaya from private equity once they clean it up a bit. They could outbid Nortel and have over 40% of North American market share. And unlike Nortel they can pay for it with mostly cash.

    I’m not saying Nortel’s efforts aren’t worthy but they’ve been fighting with one hand tied behind their back for 7 years due to their lack of a robust enterprise data portfolio.

  • Spotticus

    You should watch it, it’s a good discussion between the two CEO’s.

    It becomes very obvious, very quickly that Microsoft’s announcement with Cisco is very very different in nature to the alliance with Nortel (Balmer even explicitly mentions this). While they are agreeing that they need to work together to ensure their products interoperate with one another, it’s very clear that they still intend to compete vigouriously with one another. ICA is more about joint research, joint marketing, joint sales, joint services, joint go-to-market etc.

    As for Cisco buying Avaya, I’m not sure. there would be considerable overlap (but not as much as a Nortel, Avaya merger would have been) and past history show Cisco focusing more on picking up companies that have technology or businesses that are adjacent or complimentary to what they are already doing (Linksys, Scientific Atlanta etc), rather than doing things they already have. As well market shares are rarely additive when mergers occur

  • Casual Observer

    Yes I realize Nortel and Microsoft’ relationship is “different”. In any case, there is a long history of joint ventures in the corporate world and little evidence that they work as a long term strategy that produces high profit margins for both companies.

    In a way Nortel and Microsoft are similar in that they both are still trying to be all things to all people. Both companies no longer have a core competence and are simply going after what leaders in several different areas (Google, Cisco, IBM) are doing. In my opinion this is not a recipe that will be successful in attracting top talent in specific technology areas and this is evident in Microsoft’s loss of top talent to Google. Finally, Microsoft has poor product quality across the board. I never understood why Nortel, who still has a good name in the industry for product quality, would team with a company that has been poor at product quality for a number of years.

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