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Remembrance of Things Past (And a Brief Glance at the Future)

It's now time to take a break from writing about Nortel Enterprise Solutions (ES) and its future fate. I thought it may be interesting to reminisce about the old days, before IP telephony and Unified Communications (UC) came on the scene.For those readers younger than 40 years of age I wonder if you know what the following companies have in common, besides being multibillion dollar enterprises: IBM, Rockwell, Harris Corporation, General Dynamics and United Technologies. They are all major DoD contractors, but if I throw ExxonMobile into the mix as well? All are former competitors in the PBX market during the 1980s.

* IBM purchased Rolm, then sold it off to Siemens;

* Rockwell acquired Wescom Switching, the designer of the 580 PBX, then sold it all to Ditran (later known as Digital Transmission Inc., DTI);

* Harris Corporation acquired Digital Telephone Systems, eventually selling the intellectual property rights to the Harris 20-20 PBX to Teltronics;

* General Dynamics bought out Stromberg Carlson (an old-line telecommunications supplier dating back to the late 19th century), then sold its PBX/DBX operation to United Technologies, who also briefly owned Lexar (a start up company best known for using a Delta Modulation switching design in its original design) before selling it to Memorex;

* Exxon (before it merged with Mobile Oil) funded Intecom, an Exxon Enterprise company, eventually sold to Wang, which sold it to Matra Communications, which was acquired by Aastra Technologies.

Most of this buying and selling activity took place between mid-1970s through mid-1980s. It was a very busy time in the PBX industry, with ownership changes popping up in the news almost constantly. I could also have thrown into the mix Fujitsu's acquisition of American Telecom Inc., a company it helped fund, followed by its acquisition of GTE's GTD PBX business, but most readers should still remember Fujitsu as a leading PBX system supplier before the company abandoned the North American market. And let's not forget that Mitel was sold in 1985 to British Telecom, who sold it to an investment firm Schroeder Ventures, who eventually sold it back to one of the original company founders Sir Terence (Terry) Matthews.

The North American PBX market was contested by corporate giants back then, but it is almost the same today when considering companies like Cisco Systems and Microsoft gearing up for their upcoming face-off, and with Google lurking on the sidelines. Only a few survivors remain from the early years of the open interconnect era, NEC and Toshiba among them. Avaya, the descendent of AT&T's Business Communications organization (by way of Lucent Technologies) may soon gobble up another survivor, Nortel ES (sorry about bringing them up, but I couldn't help it). And if not Avaya then perhaps Siemens Enterprise Communications, with telecommunications roots dating back to 1847, will win the Nortel ES bidding process. More than a few once-successful companies, such as ITT, have long ago disappeared from the market. Even Ericsson (who has claimed that its namesake founder Lars Magnus Ericsson invented the first working telephone instrument) has withdrawn from the PBX market.

What does this all mean? If current market observers see major shifts in competitive equilibrium occurring, old timers such as I would tell you it's not unexpected, because it has happened before and will probably happen again. When the ultimate communications solution is a transplanted device that interfaces directly with our brain, eliminating desktop telephones, PCs or handheld communications equipment entirely from the equation, there will be a whole different lineup of competitors. The implantable communications device is not a new concept, but one foreshadowed more than 40 years ago in the movie The President's Analyst starring James Coburn. As someone educated and trained as a biomedical engineer I will be ready for that day. I just hope Obama's proposed health plan will cover scheduled maintenance of the implanted communications device.