Okay, I’m Confused

The MEN business includes all Optical & Carrier Ethernet (PBB, PBT). This sale is really about the Optical business. There is no doubt, Nortel have very good Optical products. The Carrier Ethernet hasn’t really taken off as Nortel expected. What would make sense is if Nortel consolidate the Carrier Ethernet products across Carrier, Enterprise and Metro space. This is pretty much what they doing with some of their ACE products. One product, just marketed differently.

It may include PBB and PBT, but it doesn't include any PBR. Given that portfolio gap, many interested buyers are walking away unless Nortel will PBR them ASAP. Then they will truly be classified as a "buying party."

I think Huawei makes sense as the favourite to buy Nortel's MEN unit,they do get a foot in the NA market,even though this space is crowded,no one can make boxes as cheap as Huawei could.


Question now becomes-how much is Huawei willing to pay for that extra NA $1.5-$2 billion a year revenue?

it seems the way the sale is being set up,it is just to unload the high cost unit,while Nortel still retains the related Ethernet patents for their Enterprise division. anyone?

Huawei might make sense but I think the politics of democracy will keep them out..let alone the politics of competitors like cisco, alcatel and others who don't want huaweii in their backyard.
We'll see but I doubt Huaweii will get them unless they give the MEN executives and employees over the top bonuses and provide a hefty dollar to Nortel. Really don't see it happening with Huaweii.

Please note: it's Huawei, not Huaweii.

Right as in "This is the huawei..........that was nortel

Mark, its natural because its Nortel. MEN was formed with different products including the optical business, a cloned version of Enterprise Ethernet switch 8600, legacy ATM switch products and a data center product. They started a new next generation ethernet switch with a redundant program in Enterprise, which has been canned. The data center product was also canned. ATM legacy is dead as it was starved as all investment went to Neptune that was canned.

Anybody buying will mainly go for the optical piece. The ethernet switch product if sold will be tricky as Nortel Enterprise has all the patents etc. Legal and contract nightmare. ATM product is dead. Prior to MEN, optical was part of the carrier division. Morin did an excellent job creating a story to get himself promoted to President. Z of course did not know better since he is not a telecom guy.

What can I say. To bring back the previous marketing: This is the way. This is Nortel.

Mark,

As I understand it there are three Ethernet markets: Carrier, Metro and Enterprise, each differentiate by sales channels (and functionality, of course). With their new focus on the Enterprise market I am assuming they plan to keep their Enterprise ethernet group.

However, you highlight just how confusing and disconnected Nortel’s messaging really is. This is marketing? --bb

The question is if Nortel is focused on software and services, how does enterprise Ethernet fit into the schemes of things?

It's in a different silo. Each silo has it's own strategy. It's a shame too because a few years ago Nortel could have really kicked butt in the market by leveraging it's participation across the MEN, Wireless, and Enterprise segments. It would have taken a strong COO leading the individual business presidents to break down the silo behaviors.

Too bad it didn't happen. Instead each of the businesses operated independently and selfishly, and achieved a lot less than they could have otherwise IMHO.

How does "It's in a different silo." answer Mark's question -- which is a valid question -- about Nortel's new focus on software and services? Enterprise Ethernet still requires switch hardware, and if Nortel is moving away from hardware towards a focus on software (and services), uh...how does that happen?

I personally think someone (Morin?) has misspoken or his message has been misinterpreted. I think Nortel still intends on delivering more than just software and services. However, I think they are now going to scale their efforts way back to simply deliver one new chassis that's currently in development, sell off the Passport 8600, and focus on delivering software and services on this new platform.

This prediction is worth every penny you've paid for it.

Sorry, I should have been more direct. The priority of the Nortel business units is 1) what's good for the business unit, 2) what's good for Nortel, 3) what's good for the shareholders, 4) what's good for the employees.

Marketing messages are written to support the issue of the day. I don't believe there is any overall Nortel strategy as the conflicting messages demonstrate. The CMO should force a confrontation over this nonsense. In the meantime, each business unit will execute on independent strategies and continue to issue conflicting positions.

Exactly! Ethernet is a technology layer and Nortel insists on marketing it in silos. Ethernet should underlie Carrier, Metro and Enterprise strategies not be a separate entity in each.

Whether there should be a whole different organization for Metro and Carrier is another question. I see Metro as an artificial distinction in most markets.

Guys,
They are going to buy an off the shelf box made by somebody in mexico and have s/w coneheads tinker with it.
That's the NT enterprise vision for the future.
See how they are trumpeting the microsoft/ibm alliances all of a sudden. Coincidence?
I don't think so.