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What's Nortel's Future?

One of the questions I expect people to be asking each other at VoiceCon San Francisco next week is, "What do you think is going to happen to Nortel?" A lot of reporting from north of the border is making the situation sound pretty grim.For general purposes, the excellent All About Nortel blog has great continuing posts, from a sympathetic but clear-headed and realistic perspective. That's a perspective I think a lot of us share. Nortel is one of the storied names in our business and they're responsible for some of the great competition and innovation over the years, and it's sad to see their stock flirting with the $1 a share range and people getting ready to write them off.

I'm not going to try to spin the current set of events as a good thing, but if the Canadian pundits are correct and Nortel gets pared down to just its enterprise business, that may make it a shadow of its former incarnation as a public network/wireless/enterprise powerhouse, but for our segment, the enterprise, the focus could be welcome. Certainly everyone treated Avaya as a poor stepchild when it was spun off Lucent, yet Avaya survived and is poised for a second act, while Lucent disappeared into Alcatel, taking one of the greatest research institutions in American history along with it.

On the other hand, as this columnist notes, the Metro Ethernet business was a crown jewel of the Nortel portfolio, while Enterprise faces a crowded, consolidating field dominated by two monster players--Cisco and Microsoft--that look to dominate the core business of enterprise communications for the foreseeable future.

The All About Nortel blog also cites a point-counterpoint between two bloggers about whether the Canadian government should intervene to save Nortel (point here; counterpoint here). The pro-interventionist makes essentially the kind of national-treasure/engine-of-innovation arguments that were made (ultimately unsuccesfully) about Lucent here in the U.S., while the anti-interventionist seems to rely pretty heavily on ideology.

In recent years, one of the real contributions Nortel has made in advancing the conversation about communications has been its framing of the issue of "hyperconnectivity," which was most powerfully advocated by the company's brilliant CTO, John Roese. The corrollary of hyperconnectivity--the notion that everyone is connected all the time at broadband speeds--is that there needs to be a robust platform at the core to broker that dense web of connections. John Roese indicated in a conversation I had with him at Interop a couple of years ago that this next-gen iteration of the notion of "call control" is what a company like Nortel is better equipped to do than many of the companies that haven't been managing very large-scale real-time connectivity for a century.

To me, this is still where Nortel's enterprise capability still holds the most promise. If Nortel ends up being sold off in pieces, the enterprise business could do worse than going the way of Avaya--winding up in the hands of private equity and embarking on a rigorous program of cost-cutting and refocusing. Up against the likes of Cisco and Microsoft, Avaya isn't guaranteed success or even survival, and Nortel wouldn't be, either. But it seems the best way to unlock the innovation that Canadians take such justifiable pride in when they think of Nortel.