Nortel Bankruptcy — Implications for UC
The news, of course, is the Nortel announcement today of Bankruptcy proceedings. But, as others have already commented, this is not a surprise — the rumors and preliminary actions have been visible.
What are the implications for UC? It’s not bad news, that’s for sure. Here’s a quick list of ideas:
- Motivation to Change to Software Format: This is just one more signal that there is not much profit in the traditional telecom industry — both enterprise and carrier. There are still too many players, little differentiation, and minimal or no growth. Thus, both the suppliers (Nortel, et al.) and the customers should be motivated to look to the future and move to the new, layered software model, which just happens to be the format of all the new UC innovations, from Nortel and others in telephony as well as from those in the desktop, application, mobility and web categories. This will produce a leaner, but more profitable and flexible set of solutions and options, with an emphasis on UC.
- Customer Investment in the Software Layers vs. Hardware Options: Perhaps it will make sense for customers to focus on a software-based UC overlay to the traditional telephony systems as a safety play for telecom as well as a smart investment based on the UC applications value. These software overlays could come in a variety of formats, such as the Nortel Innovative Communications Alliance with Microsoft, or Nortel’s partner solutions with IBM. Siemens Openscape, NEC UniVerge 360, Mitel Unified IP Client for SunRay, Cisco WebEx Connect are other software layer options from the telecom community.
- Increased Focus on Service Sources and Agreements: Existing customers will want to look carefully at their service agreements and providers to assure they have a reasonable source of parts (for the hardware components), a solid source of expertise from the smartest VARs, and with a good contract for on-going support from the vendor. (This is good advice for any of the telecom providers, not just Nortel, and including Cisco.) Since the pace of innovation in traditional telecom is fairly low, a good services program can deliver a long useful life for the existing products, even without new product releases. One possible implication for UC is that the pace of hardware investment slows, opening up more budgetary room for UC investments.
- New Solutions and Approaches Look More Interesting: With the traditional telephony base in question, customers may want to hedge their bets even further by exploring the alternative approaches, such as the desktop, mobility, or applications options for UC as described at VoiceCon and here on the UCStrategies.com site. Of course Microsoft Office Communications Server 2007 or IBM Lotus Sametime are the leading examples of this approach. Other options include the RIM Mobile Voice System which makes the BlackBerry phone into a corporate extension, and the embedded or integrated communcations functions of software providers such as Salesforce.com, Siebel, or Oracle.
Major events, such as this bankruptcy filing, tend to catalyze shifts in thinking and in resulting actions. This sort of evolution has happened in many other industries in past decades — transportation, automobiles, steel, newspapers, cash registers, and steam shovels, just to name a few. The cause and the effect have been innovations that, in the end, produced more efficient and economical solutions. My perspective is that this is happening in communications and the software-based world we are calling Unified Communications will be the long-term winner.
Comments?
I want to know more about the partnerships, particularly Nortel and Microsoft’s highly touted relationship which I never understood.
Seems to me MS needs a new partner - and that could be interesting since their new release of OCS is very much a PBX.
The partnerships give the customers a reliable and tested source for an optimal mix of technology:
– the proven PBX foundation for key apps such as call centers, operator positions, PSTN Gateways, and selected features and phones; and
– the enhancement of the proven desktop work environment to include “communications integrated to optimize business processes,” aka UC.
It is important not to let the financial crisis at Nortel mask the success of the ICA — major UC sales succes and growth for both companies. This is the way disruption looks — the fast growing, but small, element will be overshadowed by the maturing older elements, but that expontential growth of the new will soon intersect and supass the gradual decline of the old.
Hence, the first two bullets in the post above.
Thanks for the post, Dave.
PS: I like your blog on Cell Phones, too.