According to reports, Nortel is looking at whether to sell the portfolio or transform into into a licensing entity. The decision will be based on whether Nortel can attract a high enough price.

One company that will be interested in at least some of Nortel’s patents is Research in Motion, which made it abundantly clear that it wants the LTE patents.

Nortel is being advised by Lazard and Global IP Law Group.

Over my 19 years in the Telecom business almost everything has changed, as telecom technology continues to advance at a rapid rate. One of the things that had never changed, however, was the presence of the Norstar phone system. The once innovative product was introduced sometime in the late 1980’s, and its fantastic twenty year run has always demonstrated to me its overall superior quality.

In fact, I would classify the Norstar as, by far, the best phone system of its time, as it single-handedly propelled Nortel to the #1 position in the worldwide market share concerning small and medium business space.

The product was feature rich, well-priced, easy to install, and best of all, extremely reliable, which has allowed me to sell this system for almost two decades with an unshakeable sense of confidence. In fact, six years ago when I stopped actively selling the Norstar product, I took comfort knowing that the Telecom market was better served because the Norstar was around; kind of like my security blanket.

But, as the old adage says, all good things must come to an end, and with that I’m sad to announce that Norstar has reached the end of its impressive run.

When Avaya took over Nortel’s telecom assets they didn’t hide the fact that Norstar would be discontinued sometime in the near future, and the impending official announcement came on May 4th, 2010 with the following Avaya press release:

Due to higher than expected demand and earlier than anticipated component obsolescence, Avaya must announce the End-of-Sale (EoS) for new systems of Norstar 3×8, CICS, MICS, and Call Pilot 100/150 products, effective October 4, 2010.

Subject to availability, the latest date for orders to be placed for these products is October 4, 2010. Thereafter, these codes will be removed from price lists and associated order entry systems. Stock will be reserved to meet requirements for warranty returns and repairs.

The good news for Norstar users, however, is that Avaya is committed to providing technical support on the system for an additional three years – until October 2013.

As I stop for a moment to remember the impact Norstar had on the telecommunications industry, I am encouraged by the fact that many other reliable and innovative solutions still remain available on the market, as there are yet many other competing systems that offer the same reliable, feature rich products that will easily fill the product void left by this once innovative system.

In fact, even without Norstar, Avaya still boasts not only the advanced IP Office, but Cisco’s UCME, ShoreTel, Mitel, NEC, Asterisk, hosted solutions, and many others as well.

It’s the end of a technical era and the beginning of a new one.

The following note was written by Anthony Bartolo from Avaya with respect to the Norstar product line.

Today, we issued an End of Sale (EOS) notification for Norstar (see the Avaya Partner Portal. This was not an announcement we planned to make and a great deal of thought went into what the optimal actions needed to be. Ultimately, we were faced with a situation where demand was greater than forecasted and Norstar parts were rapidly running out. Our last buy on some of these parts, in fact, was made several years ago so we could not have anticipated this situation. While we are still five full months away from an effective end of sale date, we do acknowledge that in January we announced a nine-month notice for all major Nortel Enterprise Solutions (NES) products – but this had to be an exception. That said, we are making an additional exception for Norstar that you will like – that also applies to Business Communications Manager (BCM) (which remains for sale and is not impacted by this EOS announcement. In addition to the three-year support policy for hardware that applies to all Avaya products after any effective end of sale date, we will make an exception by matching that with three years of software support. This is above the standard one-year support for software that is our EOS policy.

With more than 3,000 patents within its portfolio, including 100 much-coveted LTE patents, Nortel could emerge from bankruptcy protection as a significantly smaller, but profitable, business. It’s entirely possible that the patent business could be accompanied by a services unit, which currently employs 1,475 people.

For more about the patent business, the New York Times has a story on Intellectual Ventures, “a secretive $5 billion investment firm that has scooped up 30,000 patents, inspire admiration and angst”.

With the sale, however, of Nortel’s enterprise business to Avaya, the “Official Converged Network Equipment Supplier for the 2010 Winter Games” is now Avaya, which is not a Canadian company.

Source: TMCNet

First, it announces the official launch of its super-duper 100G product; and then it’s selected as the VoIP Network Vendor of the Year in the Telecom Asia Readers’ Choice Awards.

“This recognition reinforces Nortel’s long-standing leadership in the global carrier VoIP and softswitch market, a position Nortel has maintained since 2002, according to industry analyst firm Dell’Oro Group.”

Another interesting issue is whether Nortel’s demise will have a major effect on Canada’s startup landscape. In Canada – and probably many countries around the world – one of the great offshoots has been Nortel employees who have left the fold to create their own startups. Armed with experience and expertise, these entrepreneurs have played a key role in fuelling the start-up landscape, even though they might not get the attention that highlights their time with Nortel.

When Nortel disappears, not only will the company disappear but, sadly, the flow of entrepreneurs coming from the corporate mothership. The question is who will replace Nortel as the corporate entity that will spawn entrepreneurs?

Will employees from Research in Motion fill the start-up gap? How about Microsoft Canada or Ericsson or Nokia or Open Text?

Any thoughts?

More more on Nortel’s startup legacy, check out James Bagnall’s story in the Ottawa Citizen.

As the Nortel saga draws to a close, I am constantly surprised that there are people still considering purchasing Nortel hardware. Worse yet are the number of dealers still selling the hardware to the unsuspecting customer.

Notice I said “unsuspecting”. Unsuspecting means “uninformed” customer. As long as there is complete disclosure on Nortel’s current situation by the selling dealer, then fine. Go ahead and pitch the product. Unfortunately, that’s not always the case.

With the Avaya / Nortel deal imminent (like weeks away), I am even more surprised by this email from a fairly large Nortel Authorized Stocking Distributor which landed in my email on November 9th, 2009. It states the following:

Nortel EDGE Promo Now Extends to Avaya Resellers
Nortel is currently offering a special “Nortel EDGE” promotion to its partners. The promotion provides an additional 20% discount off the regular reseller cost of its data products. Although it is currently scheduled to expire in December, it may be extended. We would encourage you to take advantage of this program as it will help to make you price competitive with most current Nortel VARs.

Expire. In December. This special offer expires in December ! Of course this offer expires in December. Nortel expires in December !

And more:

So that you can benefit from this 20% discount, we have worked with Nortel and have put in place a “shortcut” to get you signed up as a limited type of Nortel Partner. Under this “Get Started” program you will simply need to fill in a few fields in a form and forward it to Nortel for review and approval.

Shortcut – Of course there’s a shortcut. If they offered their normal 2 month dealer registration period then the receivers would be stuck with the hardware !

And then even better is this line – “limited” type of Nortel Partner – like how about a 3 week limit ?

Oddly enough, there still seems to be a steady stream of press releases, product update notices, and new wins for Nortel which can be found on their web site (click here)

Why ?

I understand that many firms have an extremely vested interest in Nortel hardware, need software updates or some new features, and a fork-lift upgrade is too cost prohibitive. But new wins ? Why would a company, given the choice among Cisco, Avaya, Mitel, Asterisk and so many other viable brands, choose to deploy a NEW Nortel solution ?

And then the next question is – why is Nortel still introducing new product updates for some of these products?

Nortel is in a precarious position at the moment. They need to continue developing products, updates, and position new sales opportunities in light of the pending sale of the optical networking and carrier Ethernet divisions, and on the enterprise side, the sale to Avaya could, or might not officially close. It’s not a done deal until it’s done. They need to continue developing products to keep the company and division sale prospects alive.

I’m still surprised that from a competitive perspective, companies are still entertaining new Nortel systems. Where at one time I would see Nortel positioned in every opportunity, I now see them 1 in 5 times. But I’m still surprised that: there are companies considering new Nortel systems, and even more, that there are North American dealers that still only position Nortel in new opportunities. What should an exclusive legacy Nortel voice or data dealer do at this point ? I suspect that many are hanging on stubbornly until the very end. But why, I haven’t quite figured that out.

In addition, Nortel is still sending out email notices with new product announcements, and oddly enough, new training classes for their products. Again, I guess there are dealers that need to get their older legacy technicians trained.

The irony is, the company is dead. They are closing shop. Yet, over the last 2 weeks they made 12 announcements. As Yogi Berra said “It ain’t over till it’s over”.

In a court filing, Nortel said it hired Global IP after submitting requests for proposals to nine consulting firm based on the belief it requires “the services of a capable and experienced intellectual property consulting firm because, among other reasons, the valuation and monetization of the Residual Patent Portfolio cannot be effectuated without such services, and such efforts are important to the Debtors’ success in their Chapter 11 cases both individually and as part of Nortel’s global restructuring efforts.”

In what could be a three-phase project, Global IP will initially perform a preliminary market analysis, identify key assets within the patent portfolio, and provide insight into the strength of each patent. This phase will cost $350,000, plus expenses.

If implemented, the second phase will involve the development of business cases for each key patent. The third phase will involve a valuation analysis of the top patents within the portfolio, the creation of strategic alternatives for “exploiting” (translation: getting as much money as possible for them), as well as a strategic recommendation on how to maximize the value of the entire patent portfolio and IP business.

This take on the world struck me when hearing about Nortel’s presence at SUPERCOMM last week in Chicago in which Nortel aggressively waved the flag about some new products. It has to be an odd feeling to be manning the Nortel booth at a time when everyone knows Nortel is not going to exist for much longer. I suspect that if Nortel was handing out swag, it had to be considered as collector’s items.

In any event, the reality is that after Nortel disappears, its carrier and VOIP businesses will carry on with new owners, and that its employees will continue to do what they’re doing but, hopefully, with a more stable employer.

For more on Nortel’s activities at SUPERCOMM, here’s an article from Xchange magazine.