Nortel’s Enterprise Surprise

Bankrupt Vendor Says It’s Funding R&D in the Enterprise Division with a ‘Start-Up Mentality’

You might have heard that Nortel Networks is in bankruptcy. You might have heard that it’s struggling on the service provider side, losing out in Verizon Wireless’ LTE contract awards and mulling whether or not to sell off the Metro Ethernet division to raise funding. Luckily enough, Nortel’s enterprise division, with thousands of customers, might just be the vendor’s salvation. Really.

“Since Jan. 14 when we filed bankruptcy, we’ve had hundreds of new customer wins, including a world-renown university, two very large financial services firms, an airport and more,” Tony Rybczynski, director of strategic enterprise technologies at Nortel, told xchange. “There’s a lot of confidence there. We have seen companies deferring some major investments, but IT budgets are actually generally flat rather than reduced. So the focus is on how we can get a bigger share of the flat wallet. Can we snag the investment they were going to put into data consolidation and instead get them to spend it with us on UC?”

He added: “We’re continuing to be very successful.”

This bit of news flies in the face of the comments made by analysts like Oppenheimer & Co., which has opined that Nortel’s enterprise business, despite leading in unified communications and despite its many, many customers, is in fact the most in peril. It postulated that a bankrupt Nortel would a) cause its channel partners to flee; and b) make CIOs leery of making a Nortel investment without a guarantee the vendor would be around to support it down the line.

Pshaw, says the vendor. Rybczynski said that Nortel’s been very active with its wide embedded base of customers and potential clients to reassure them that it has no intent to exit the enterprise business. Quite the contrary.

“We essentially have an incubation program for new technologies, and we’re still setting aside R&D dollars for advanced research because we have a start-up mentality,” he explained. “This is a key area of focus at Nortel.”

One fruit of that is Nortel’s “web.alive,” which is a virtual world software application for collaboration, assisted e-commerce and virtual learning and training applications — sort of like Second Life for business. web.alive can be embedded directly within a Web page and uses 3D graphics and spatial audio. And the R&D seems to be paying off: Nortel just signed a deal with laptop-maker Lenovo to provide them web.alive for e-commerce. The Lenovo eLounge lets the public test-drive its products as if they were there.

Nortel is investing in its enterprise division in other ways as well: It just hired John McHugh, as vice president of enterprise solutions. McHugh is the former worldwide general manager of Hewlett-Packard Co.’s ProCurve unit and widely beloved by channel partners, which should help protect Nortel a bit from Oppenheimer’s prediction of fleeing VARs.

’Plenty of Opportunity’

In terms of getting that share of wallet that Rybczynski mentioned, Nortel is focusing on aligning its sales initiatives with the global economic realities, and he stresses that the vendor is seeing “plenty of opportunity.”

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