Facing a difficult market for networking and telecommunications equipment, Nortel Networks Corp. created a new Enterprise Networks division in October. The purpose: to spearhead Nortels rebound in selling equipment to large corporations, taking advantage of new technologies, such as VOIP.
Malcolm Collins, an 11-year Nortel veteran, was named president of Enterprise Networks at Nortel in December. Collins met with eWeek Editor in Chief Eric Lundquist and Executive Editor Stan Gibson in eWeeks editorial offices in Woburn, Mass., where he outlined Nortels strategy to recover the initiative in the enterprise.
What is the importance of the Enterprise Networks group at Nortel?
Were responsible for $2.5 billion on sales, and weve got 7,000 out of 37,000 Nortel employees. Its very important to Nortel.
Going back over the last 12 to 18 months, the biggest question of large enterprises and channel partners was the survivability of Nortel. We spent the best part of 12 months addressing that in the marketplace.
The fact that we set up this division in October and that its profitable shows were focused on enterprise again. In Nortel Enterprise Networks, voice and data came together.
How do you assess your competitors?
The one player we see every day in every market is Cisco [Systems Inc.]. But we also see Ericsson [AB] and Siemens [AG] in Europe. Were one of the few companies that compete in all those markets. One of the things were finding out in the marketplace is that customers want a choice.
But do they exercise choice?
No. I think thats my greatest challenge. Theyre being convinced that if you buy a LAN from somebody, you have to buy a router from the same company. If you buy a router from somebody, you have to buy voice over IP and security from the same company.
CIOs and [chief financial officers] should be demanding open standards and making sure theyre getting the best value for their corporations, and that hasnt been the case. People are locked in, and thats not a healthy situation to be in.
Nortel is made up of many companies that were once competitors of Cisco. They did not succeed, and so they merged. What is your strategy for beating Cisco?
There is no silver bullet. Its about doing a lot of things and a lot of things well. It kicks off with having great products, filling the gaps in our portfolio, and getting the performance and price points right.
In voice over IP, there was a perception that Nortel was late to the marketplace. But the reality was that we hit the right point in the market. We now probably have the most complete voice-over-IP portfolio in the marketplace.
Do you see voice over IP as the No. 1 battleground?
Yes. Today, convergence is the hottest issue out there.
Are you seeing spending beginning to rebound?
When you looked at all the analysts, forecasting in 2003 in the enterprise space, some were saying that growth rates in enterprise spending are between 0 percent and 4 percent—some said up to 8 percent. I dont think were seeing that today.
People are spending more time watching CNN than worrying about whether theyll upgrade their LAN. The whole first quarter, people were wondering what was going to happen [in world affairs]. It was a bit of a waiting game.
Is Nortel using voice over IP internally?
Yes. I use it. Now, I can talk to the U.K. via my PC, using our IP VPN [virtual private network] combined with our software.
Im going to be changing a lot of our sales offices very quickly to voice over IP so our salespeople can demonstrate and use that capability.
What about switches, like content switches, for example?
Were using that technology in content switching blades, and were using that technology in our Layer 3 and Layer 2 switches.
What can we look for in future announcements?
Youre going to see new products coming in Layer 3 midmarket [technology], in IP VPNs and our secure routing technology. The issue of multiprotocol routing goes away as everyone goes to IP, leaving the biggest issue to be security. Were moving to a new class of secure routing product.