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A New Year for Telecom

By John January 9, 2008 3:22 pm

Location: Train from Toronto to Ottawa

Hopefully you have all taken some time off to recuperate from a crazy year and prepare for a truly transformational year in telecom in 2008. I spent a few much-needed weeks recharging over the holidays, and also spent some time reflecting on 2007 and what we have to look forward to in 2008. I thought I would take a few minutes in this first post of the new year to set the stage for 2008 and to share my excitement about the inevitable acceleration of change in the telecom and IT landscape.

This week at CES, Bill Gates gave the opening keynote (billed as his “final” CES keynote, as he transitions away from day-to-day Microsoft operations in the middle of this year) and made the statement that we are at the beginning of a new “digital decade,” one in which technology “will make our lives richer, more connected, more productive, and more fulfilling."

While his views of the technology underlying this era and mine may differ, I completely share his view that we are now at the edge of a new era that will manifest itself with everything we have been preparing for in Nortel in 2007.

This year:

  • We will see everything that can be connected and would benefit from that connectedness being connected …we call that Hyperconnectivity and we’ve been talking about it for well over a year.
  • We will see the first commercial manifestations of the 4G world … something we said would happen much sooner than people expected. This is much more than just deployment of networks of WiMAX and LTE, but rather the sudden and unexpected emergence of devices and applications that use 4G technologies and wireless for novel and valuable new business models (for example, the Kindle from Amazon, the OLPC XO laptop, and WiMAX-enabled cars).
  • We will see increasing deployments of Carrier Ethernet technology. At the start of 2007 (and, in fact, well before), we said that there would be a new dialog on wireline networking technology and that Ethernet should be a carrier technology. By the end of 2007, PBT and Carrier Ethernet have become central to the industry dialogue that used to be only about MPLS.
  • And, we will see the IT and telecom worlds converge in ways we have never seen before …the reason we chose to partner with IT companies like Microsoft and IBM rather than merge with telecom companies that only duplicate our skills. In fact, we are already seeing telecom services such as presence, voice, conferencing and collaboration become web services embedded in a wide range of classic enterprise applications (CRM, ERP, healthcare systems, hospitality…).

All of this is indicative of a change in the landscape that trends towards convergence and inter-domain solutions …à la the atom chart we put up over a year ago.

I am personally excited to see much of what we expected/predicted happening. But to capitalize on this, we needed to do more than just simply see the future. We also had to create a sustainable company. And, we’ve been doing that.

As we enter this new era:

  • Nortel is stronger and healthier than it’s been for years – thanks to the strong leadership of Mike Z and his unrelenting focus on ensuring we have a solid business foundation in place (in terms of financials, strategy, people, etc).
  • The immense work we’ve done to transform our R&D organization (the subject of a future blog) to focus on the future and to operate in a more global and flexible model will be a strong and critical asset for Nortel.
  • The partnerships we have established with companies like IBM, Microsoft, LG Electronics, and others who share our views of the inevitable convergence of IT and telecom are starting to have impact.
  • And, our more proactive approach to sharing our vision (through forums as diverse as this blog, to “real” marketing, to new media) have made us once again relevant to the dialog of our industry.

As a result of these initiatives and many others, we find ourselves in a very different and much stronger position than a year ago to compete for share in the “new digital decade” that is just beginning.

Welcome to 2008. It’s going to be a very exciting year for telecom from a technology perspective. It is also going to be a year that is now about execution and agility and the vision to see the future opportunity and exploit it quickly.

I look forward to this playing field and I look forward to our continued dialog as this year unfolds.

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  1. […] CTO John Roese has posted his first blog post in a month (John: someone’s got to monitor you!), and he provides a nice overview on […]

    January 15th, 2008 at 12:48 pm from All About Nortel » Blog Archive » Roese Blogs on Nortel 2008

  2. […] CTO John Roese has posted his first blog post in a month (John: someone’s got to monitor you!), and he provides a nice overview on […]

    January 15th, 2008 at 12:48 pm from All About Nortel » Blog Archive » Roese Blogs on Nortel 2008

Comments

  1. As an SE who has been on board for 14 months and who came from the customer side who used Nortel Voice and Cisco Data, I’d like you to elaborate on “‘real’ marketing” after reading my comments below. Being as close as I am to Chicago, IL, I expected to get some residual of Project Tornado - however, I didn’t.

    Current customers and vendors are still asking “When is Nortel going to advertise? Nortel needs to advertise on TV.” College grads are asking “Who is Nortel?”

    Nortel must understand that not only is Hyperconnectvity well on the way (as you state), but the IT Industry is going through a generation shift with the 20-somethings changing the guard of the Baby Boomers. As this shift happens, CIOs are looking to their employees/techs/engineers to investigate/implement/support what they have heard of or know. CIOs may reference Gartner, but technicians and engineers do not - they look at what they’re comfortable with. When what they are comfortable with is in Garter, it is icing on the cake and a no-brainer for the CIO.

    Therefore as part of this “Generation Shift” and comfort level, Nortel must start hitting the emotional cord of the 20-somethings in advertising. If not, everything Nortel has identified will go as a whisper even though they’re happening right before our eyes. This is because the “shift” doesn’t know Nortel started it or even that we exist. To let us know, I reference the “emotional cords”. Emotional cords of the 20-somethings relate to “how can I work less and play more?” and “what is in it for me?”

    To answer those two questions, Nortel must change the way we think marketing technology should be marketed. Rather Nortel must use companies like Anheiser-Busch and Disney World as bench lines. Advertisements that illustrate free-time, family and friends to IT because of their Nortel selection.

    For example, Budweiser has a new commercial stating “Budweiser goes through a 7-step brewing process. Allowing you to go through your two step process, twist and drink.” That makes me want to drink Budweiser. Not because I can even start to remember the 7 step brewing process, but I can emotionally relate to that 2 step process.

    Translate that to Nortel - because that is what you and I care about. Let’s remove ourselves from technology advertisers and relate to “what” we all work for - life. Create the IT person who works on Nortel as the IT person with a life that anyone can talk to.

    For example, the following storyline:

    CIO knocks on the cubicle of the Nortel Engineer and asks “When do I need to advise the company of the downtime for the large upgrade?”

    Nortel support engineer relaxed browsing You-Tube replies “You don’t; I did it 5 minutes ago.”

    CIO surprised, “There wasn’t any downtime!?”

    “I know, we use Nortel now”.

    I look forward to hearing your thoughts at the GSC, if not sooner.

    Craig

    January 9th, 2008 at 11:49 pm by Craig

  2. “Nortel is stronger and healthier than it’s been for years – thanks to the strong leadership of Mike Z”

    Huh? By what measure? Not by share price. Not by revenue. Not by margin. Not by industry leadership. Not by thought leadership. Not by ESAT. By what???

    “…we find ourselves in a very different and much stronger position than a year ago to compete for share in the “new digital decade” that is just beginning.”

    Why? Less cash, less momentum for WiMax, IMS in the ditch, etc.. Please elaborate so we can share your excitement. Seriously.

    We want to get behind Nortel, that’s why we’re here. Give us some real insight - not marketing-speak - on why we should feel positive. Please.

    January 10th, 2008 at 2:54 am by Nortel Watcher

  3. @Nortel Watcher:

    What is “ESAT”? Share price is obvious. Where can we find revenue and margin numbers for 2007, specifically Q4? How are you measuring industry leadership and thought leadership? What are current cash levels?

    Please give us some real insight - not just anti-marketing-speak - on why we should feel negative. Please.

    January 10th, 2008 at 9:20 am by Geoff

  4. Hope you had a nice vacation. NT is bankrupting all of us (shareholders). Great Job.

    January 10th, 2008 at 11:12 am by Scorned Nortel Long

  5. Geoff,

    “esat” is an internal measurment/survey nortel does every year to measure employee satisfaction. It is a rudimentary “360″ feedback process, measured because there is a correlation between employee satisfaction (esat) and customer satisfaction (csat).

    The problem is that most of the questions are leading (or misleading) and there really isn’t a way (or a will) to translate “esat” to bottom line business improvements.

    I wonder if “esat” is tied into the “six-sigma” effort? I somehow doubt it.

    January 10th, 2008 at 1:35 pm by many

  6. John,

    I saw the Gates farewell interview and had the same thought; that he was saying that things were “wide open” again, much like when he was first involved in computing.

    He also seemed to indicate that because of this he thought this was a good time (inflection point) for him to transition out.

    Do you think that similarly, that this is a good time for nortel to EoL some of it older product lines?

    January 10th, 2008 at 1:49 pm by many

  7. John,

    Please take note with the number of responses to your blog and to the level of concern there is on the share price and the overall health of Nortel.

    Nobody at Nortel seems to address this with action — I do not see anyone in Management buying shares considering that “Nortel will be one of the great turnarounds in corporate history”. Today your stock price is down while your competitors like Cien, TLAB and Eric are up.

    January 10th, 2008 at 2:30 pm by Nick Disappointed on Nortel

  8. Not even one mention of iPhone. That revolutionary device that is causing Verizon to hemorrhage customers. In wired they say that Verizon turned down Jobs straight away. Why didn’t Nortel guide our best customer to the correct decision about this technology. Are we not the experts? I would like to think we are.

    January 10th, 2008 at 3:44 pm by Scott code monkey

  9. John, the 2008 CES has a lot to do with wireless and connectivity but my guess is that none of that hyper-connectivity you have been talking about matters if Nortel continues to show no sign of success with its WiMAX efforts. Drop your WiMAX R&D program and buy something like Alvarion when it’s still cheap. I started to get the feeling that Nortel is verbally using LTE as its escape goat for failing with WiMAX. WiMAX is at least two years ahead of LTE, being deployed all around, and expected to share 90% of the technologies LTE will be based on.

    January 11th, 2008 at 9:55 pm by jim

  10. Scott code monkey, et all:

    You are aware that AT&T is a Nortel customer just like Verizon. Apple is not a Nortel customer. From a Carrier perspecitve, Nortel will appreciate the network upgrades that ‘may’ be required to support iPhone and the like consumer devices.

    Nortel uses iPhone as a device in the example of Hyperconnectivity. Nortel must define what will be the device(s) that will create Human Convenience that will match into our Machine-to-Machine story.

    Nortel is the expert. The fundamental problem is that we don’t tell anyone we are.

    NT Stock price woes are a result of Nortel being perceived as a Carrier Company to Wall Street. When VZ, T, etc post flat to losses, Traders sell off on Suppliers to the Carriers.

    Fundamentally, we need to tell the world we are more then just a carrier supplier; not just tell our Internal employees and customers.

    January 12th, 2008 at 2:26 pm by Craig

  11. Nortel should now start specializing in the Telecom Domain.
    The top management should now sit and select between the voice and Data products, Wireless or Wireline,GSM or CDMA. Etc.
    Instead of being known as the ” Jack of all trades” Nortel should wisely select sectors and be the” master”.
    Sample Suggestion: Enhance the Enterprise telecom sector with wide investments phase out the GSM and CDMA products and concentrate on the Wimax and 4G products.
    Concentrate on the voice products and give up the data products as Cisco rules the Data part.

    January 12th, 2008 at 2:37 pm by rafi

  12. John

    Nice to see someone at Nortel say something positive, unfortunately the market does not appear to share your thoughts…..would be nice if management demonstrated support for this sediment rather than continuously selling their shares as well. I recognize the company is nervous after so many lawsuits, but come on….. Mike Z is letting shareholders get punished again and again by letting the stock free fall in value

    January 14th, 2008 at 6:04 am by Brad

  13. “The biggest threat to hyperconnectivity nirvana is carrier cluelessness” @ http://computerworld.com/action/article.do?command=viewArticleBasic&articleId=9057720

    January 20th, 2008 at 1:19 pm by Bill

  14. Bill,

    Probably the “best” pricing model from a purely economic PoV is a much flatter structure, like pre-paid. However you might be surprised how many customers seem to like to keep a detailed accounting and cafeteria lists of bells and whistles.

    I think it is fair to add to that list; clueless regulatory agencies, clueless standards bodies, clueless equipment manufacturers, clueless consumers and that darn thing called traffic, which no network provider can predict or afford to build capacity and survivability for all scenarios and types. Then there is that silly thing called ROI that those darn shareholders insist on.

    Of course, my point is that blaming the carriers solely for the problem is clueless in and of itself.

    January 22nd, 2008 at 12:31 pm by many

  15. “The boom [in the number of users uploading novels] appeared to have been fueled by a development having nothing to do with culture or novels but by cellphone companies’ decision to offer unlimited transmission of packet data, like text-messaging, as part of flat monthly rates.”
    @ http://www.nytimes.com/2008/01/20/world/asia/20japan.html?_r=1&ex=1358485200&en=0b46d32f7c7d037c&ei=5088

    January 22nd, 2008 at 4:25 pm by Bill

  16. John,

    The vision is all well and good but I am inclined to agree with others above that Nortel needs to get its advertising act together. I went to VoiceCon last year and center stage was Cisco followed by Avaya located in the main thoroughfare. Nortel was outside by the pool in the shadows. I am going again this year and hope to see a better presence reflected by Nortel. As I constantly hold the Nortel flag up, it is hard to defend it against my superiors who are taken in by the Cisco shtick.
    Also, any chance I can order a set of soft cover NTP’s
    from someone at Nortel someday? I have been on a mission for two years trying to smooth the process, even to the point of contacting Global Knowledge to see if I could purchase it’s used books or hire its printer. As I design platforms for our facilities, I don’t want to have to reference a CD every time I need information. I find it amazing that one cannot even buy this material.

    January 23rd, 2008 at 12:36 pm by Bernie Johnson

  17. Share price now uner $6.00 (that’s equivalent to less than .60 cents before the split; .60 cents down from $120.00 high???). Will Nortel even exist a month form now?

    March 17th, 2008 at 1:24 pm by Jim Patterson

  18. Who do I ask or where do I go to find out if Nortel expects to meet its debt obligatiion in Sept 2008 $698 mil. That’s all I care about right now. I’ll ride it out if they expect to meet that obligation. You would think the board of directors would be deciding whether or not to announce a buy back or at least buy some shares to show they have faith in the solvency of the company.

    March 17th, 2008 at 4:58 pm by Jerry

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