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Mobile World Congress 2008 – Oh, what a difference a year can make

By John February 18, 2008 10:16 am

Location: Flight from London to Ottawa (returning from Mobile World Congress)

After a good few days at Mobile World Congress in Barcelona, my single biggest conclusion is “Oh, what a difference a year can make”. I have been in this industry long enough to know that the one thing always true about the telecom and IT industry is that it is a continuous journey of change. Some people believe that the past or even the present defines the future, but I am not one of those people. I am an optimist. I fully believe that we can shape our future and that having a strategy and then executing the tactics needed to deliver on that strategy puts you in control of much of how that future emerges.

Why this philosophical rant? Well, quite frankly, if you compare Nortel and the telecom industry of today versus one year ago, it is clear that although you cannot fully predict the industry you can clearly influence its path. Let’s compare a few year-over-year examples of this thought.

A year ago, Mobile World Congress was actually called 3GSM. As the biggest event in the carrier industry and with a name like 3GSM, a company like Nortel - who a year ago was espousing the need to accelerate 4G and supporting technologies like WiMAX, LTE, and UMB - didn’t seem to fit the image of mainstream telecom and wireless. Shouldn’t we have been showing more GSM technology instead of all this “distant future technology”? Were we being overly optimistic that this slow-moving industry could actually accelerate?

Well, this week the show was all about the reality that this industry did, in fact, accelerate. Technology like WiMAX is viewed as nearing mainstream adoption, and technology like LTE is being realistically accepted as destined to be deployed as early as 2009-2010 in multiple markets. In fact, the CDMA base has gone from being the outsider to the lead market for the first incarnation of the now-accepted global harmonized technology for the next mobile broadband networks: LTE. If you are honest with yourself, you must admit that most of the pundits didn’t expect the telecom world to be at this point today. Most were far less ambitious because this industry has historically moved much slower than it has in the past year.

A year ago, the wireless industry was a stand-alone pillar of telecom. What wireless did or did not do had very little impact on other pillars of telecom, such as wireline networks, communications applications, VoIP, or even the broader applications ecosystem of IT.

Today, we have a wireless industry that is part of a synergistic convergence of IT and telecom. You cannot discuss 4G without a deep dialog on how the wireline network will scale to provide backhaul at better cost per bit and greater capacity than ever before. You cannot dialog about 4G without exploring the new applications that are becoming possible with the new capacity and cost equation of OFDMA and MIMO technology in wireless. You cannot consider wireless networks without including the carrier VoIP market, which is the agreed-upon method that will be used to make voice and real-time communications possible in these new networks. And you cannot consider the fate and shape of the wireless industry without including IT companies like Microsoft and Google and technology companies like Apple in the total view of the industry.

Without a doubt, we are now seeing the realization of the “atom chart”, with Wireless, Wireline, Carrier, Enterprise, Infrastructure and Applications converging into a new ecosystem of communications. There is no stand-alone wireless future, but rather a future where wireless is a part of something much, much bigger: the converged IT and Telecom worlds.

And, finally, a year ago, the wireless industry was about connecting people and handsets to the mobile network. Today, that is only part of the story. The hyperconnectivity we envisioned and began talking about well over a year ago is becoming a mainstream dialog in this industry. Yes, there were lots of new slick handsets at MWC (including offerings from LG, Motorola, Google, Samsung, DoCoMo, and NEC, to name a few), but there were also lots of new devices and applications that were not tied to the traditional image of the cell phone. The Amazon Kindle, broadband-connected automobiles, gaming systems and even smart phones that could arguably be described as more PC than phone given the applications in use on them, show the early reality that wireless is about connecting anything that would benefit from being connected, and not just about the traditional end points of the past.

The bottom line is that there are many aspects of the last year that give me confidence that this industry is both accelerating and heading in a direction consistent to the path we are on. That’s good news. The reality, tho’, is that it’s still a journey and the critical task at hand is execution to capture the market as it emerges.

From that perspective, the observation I can make is that the playing field has become a lot more level in the last year, where some of us are executing much better than a year ago and others (including some of our competitors) are stumbling (much to the surprise of many who thought they were invulnerable to the whims of the market). The race is on, the future is pretty clear, and the market is open to change.

I look forward to seeing what Mobile World Congress 2009 will be like and to look back to see what will have changed this year. My bet is that this industry will continue to change more rapidly than most anticipate and that it will be different than we expect. But, regardless of the change, I do believe that it is an opportunity to alter the vendor landscape and our relative position within it.

I have included a number of links to various MWC 2008 summaries and announcements for those of you who might want to see some of the detail of the changes and events mentioned above. Enjoy.

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  1. […] John Roese, CTO Nortel, muses as he returns from the Mobile World Congress 2008 – Oh, what a difference a year can make a: You cannot consider wireless networks without […]

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Comments

  1. Interesting:

    A year ago the stock price was much higher

    A year ago there was hope amongst shareholders that the CEO would be honest and tranparent

    A year ago there was hope that there was a plan that would not destroy lives……

    Unfortunately, false hope….. CEO who states he cannot understand why the share prices are so low just two weeks ago and then drops bombshells at the earning calls…. like I said…. A year ago we had hope….interesting what can happen in a year….. Mr. Z and upper management should be ashamed of themselves

    February 27th, 2008 at 5:50 pm by Brad

  2. The stock price says it all.

    February 27th, 2008 at 6:09 pm by Bob

  3. What I like most: those preferred share dividends

    February 27th, 2008 at 6:29 pm by Klaus Zafirofsky

  4. Nice - Thanks “management team”! I hope you don’t sleep knowing how many people lost their hard-earned money today investing in Nortel believing your turn-around story. As soon as you “decided” to take that $1billion charge, you should have informed shareholders. Other than Mike Z you guys don’t even have enough faith to buy shares and hold them yourselves. If you truly believe that the shares should be valued higher - BUY them.

    February 27th, 2008 at 6:50 pm by Steve

  5. Also interesting:

    In 2005, Mr. Z said we were facing a 3-5 year turnaround. Turnaround target stated as ‘double stock price’, which would equate to about $65.

    Instead, in time since then the company has shed about 75% of its value, put 4000 people out of work, and driven away most of the top talent. Worst of all, there is nothing to point to that is going to stop the trend. Joel Hackney has even managed to reverse the positive momentum of the Enterprise business growth, showing solid erosion.

    John - this is a technology blog…but…when the business is in crisis, which Nortel surely is, it’s important to shore up confidence by articulating a vision that ties in technology vision with execution strategy. We like discussing views on the future here, but if it has no tie in to Nortel’s strategy, what’s the point of discussing it here? It’s just jibber jabber. We can go to another company’s blog where they’re not just talking.

    So, as I suggested to Phil once, I think you’re missing an opportunity with these blogs. If you really commit to an interactive dialog here, you’ll be surprised at the kind of input you get - for free. Sure, there are some crackpots on these sites, but those inputs are easy to disregard. I highly recommend that you stop using these blogs as marketing spigots and start using them as resources.

    Finally - the CTO - you - need to take control and get Nortel on a course to leadership. It isn’t going to come from the GE factory boys or the ops boys…you are the ONLY hope. If you can’t get the kind of support you need to get the job done, you should resign. Otherwise, your credibility and your career will go down the drain alongside the company that pays your salary.

    For the sake of the families who depend on Nortel, good luck.

    February 27th, 2008 at 8:23 pm by Another Nortel Watcher

  6. I have been a long term shareholder with well over 300k invested. My father, uncles, grandfather all worked at one time for Northern Telecom. My disgust and dismay over the route that the company has taken over the last decade. Although present management is not completely at fault I have reamined a shareholder based on the “feel good” comments the present CEO has made since he took the helm. I feel that Nortel management has not been upfront and has hid facts that only seem to come out with earning reports. Always a surprise and a “one time” or “on going charge” that always seems to ruin any positive outlook that I try so hard to keep.

    Get your act together, Please

    Mike Allder

    February 27th, 2008 at 8:58 pm by Mike Allder

  7. Nortel senior management keep saying the transformation and business model is working and is on track, in the meantime, the company value has dropped more than 2/3 in the year to a penny stock status before reverse split. Though it takes time (3-5 years) to re-build, that does not mean the company would contract by such a great extend in a year. Nortel does have brand and image problem. Nortel Management must convince the market the otherwise. What a disappointed year for the loyal shareholders!

    February 27th, 2008 at 9:07 pm by Herb

  8. Nortel senior management keep saying the transformation and business model is working and is on track, in the meantime, the company value has dropped more than 2/3 in the year to a penny stock status before reverse split. Though it takes time (3-5 years) to re-build, that does not mean the company would contract by such a great extend in a year. Nortel does have brand and image problem. Nortel Management must convince the market the otherwise. What a disappointed year for the shareholders!

    February 27th, 2008 at 9:07 pm by Herb

  9. Mr Z I can not take this anymore please resign.

    February 27th, 2008 at 10:41 pm by Buster Hyman

  10. Brad,

    As a long-time Nortel employee, I beg to differ. Like all employees and shareholders, I’m disappointed with the share price (but that’s not something we can control directly), disappointed that there’s more job cuts, and disappointed that we’re still not profitable. But, that being said I am more optimistic about the future of the company than I have been in many years. The leadership team we have in place is by far the strongest we’ve had in a very long time and despite what your perception might be they are also the most transparent we’ve had in a long time.

    When Mike Z joined the company just over two years ago he was very clear about saying this ship wasn’t going to turn around overnight. That was disappointing for us (especially those of us who were around in the glory days), but it was a realistic outlook and the right thing for him to do in terms of setting expectations. He has always said he was spearheading a five year journey to transform the company to make it great again. It took the previous leadership more than five years to mess it up, so it’s going to take some time to get it back on track. Although I’m disappointed with today’s announcement, I’m at the same time encouraged by our progress - I wish it was faster, but I’ve resigned myself to the fact that like Mike Z said it ain’t going to happen overnight. Our financials, although still not great and where they need to be, are stronger than they’ve been in a long time. Customer confidence is returning and we’re winning key contracts and important customers. We’re focused on technology again, and we’ve made lots of investments for the future, which is something we weren’t doing much of before Mike Z came on board.

    I know that many of my colleagues feel the same. There was an employee blog that was launched just for today’s announcement, where employees could go on and leave comments or ask questions about today’s news. And what was so encouraging is that they were pretty much all answered – very openly and very transparently by different executives. The comment I really liked that was left by one employee (and I won’t name the person on an external blog) – and one that reflects my own feelings – was “We as employees of this company need to make a personal choice – to stay and fight the “tough fight”– or to move on. With the direction the company is now heading, there are increasing opportunities as an individual to contribute and make a difference. Personally, I’m prepared to fight!”

    Me too! Keep the faith, and don’t give up on us yet, Brad. Mike Z has put together a world-class leadership team over the last 2 years (I truly believe it’s one of the best we’ve ever had), we have an unbelievably dedicated employee base, and we are definitely making progress. I’m feeling pretty optimistic that Nortel is headed for good things :)

    February 27th, 2008 at 11:01 pm by Optimistic about Nortel

  11. The future-I agree leapfrogging to the 4G concept was a good idea..the PDA, mobile pc, or smart phone will ultimately be the device of choice for its convenience and simplicity. If Japan’s any indication, a recent study found more people in Japan have budgeted for upgrading to a smart mobile device rather than a classical PC. Also the trend towards economically bundled data packages by Verizon, AT&T, and others will make it within reach of the average consumer. I personally look forward to the day I can give up my monthly $100 broadband and landline and watch free digital TV while subscribing to 4G for for my internet and voice needs.

    One comment regarding the earnings this past qtr-the analyst did quite a spin on the results. Ridiculous. They all but totally ignored the +$0.32 per share earnings before the “non-cash acctg charge” and the looking forward added $300M cost cutting savings could potentially result in another +$0.15 per share qtrly earnings. Regardless of what the analyst agenda may be or how ridiculous they are, the results need to be communicated in a straight talking prepared fashion to insure the analyst, in turn, present both fair and balanced opinions to the shareholder.

    Regards, Dave

    February 27th, 2008 at 11:11 pm by David

  12. At this point the best thing for employees and investors is for Nortel to sell its self off or be acquired (friendly) by a major that can use what is good and liquidate what is bad. It would be nice if Mike Z could get the acquiring company to make good on the Nortel employees retirements and time. It is hard to blame the crew if the captain has the pilot chart a course into the rocks, the crew still does its job.

    PS. Stop blaming the other guys, you are in charge. It makes you sound like G.W. Bush

    Great job Mike Z!

    February 28th, 2008 at 6:51 am by Nortelhand

  13. Optimistic about Nortel,

    Your monicker suggests it all. Tho I am down 500K, I am sticking on, and encouraged by your post of a movement within. Weeding out the non performers and making the rest work and think like a single organism will definitely do wonders for NT in the years ahead.

    Please keep up the good work. We as shareholders trust and will stand by your side.

    Thanks.

    February 28th, 2008 at 7:28 am by Mr X.

  14. Non-performers? That would be great; however, they are not weeding out the non-performers. They are weeding out the higher skilled and replacing them with lower skilled and non performers.

    February 28th, 2008 at 4:28 pm by Dazed

  15. Ok John - 24 hours in the midst of a crisis of faith and not a peep from you. As usual. You’re behaving like the George Bush of CTOs.

    Step up and interact or shut down this marketing pipeline and come back when you’ve done something that makes a difference. You don’t seem to understand the purpose of a blog. Many people in your organization are sending out messages that it is the same story on the inside - not good. I’m sure the press gets the same messages I do.

    February 28th, 2008 at 10:50 pm by Another Nortel Watcher

  16. John is looking out for himself. He has to check wiht Mike Z to see what kind of spin he should put on any comments. It is just the way it works, don’t get your boss mad; that will cause your pay check to end. And everyone has seen Mike Z chop top management heads before. See no evel, speak no evel, say no evel or the king will have your head.

    February 29th, 2008 at 12:54 am by Nortelhand

  17. A year ago there weren’t signs taped to vending machines touting the savings gained by turning off their display lights.

    Management apears to have decided that turning off electricity everywhere, or at least plugging equipment into “cheaper” outlets overseas, is the most convenient and simple way to save money, and even declare it a profit made, and that this should somehow inspire confidence among stock buyers and employees.

    I also highly recommend that brass stop using blogs as marketing spigots and start using them as resources.

    February 29th, 2008 at 8:09 am by Puddintane

  18. P.S. You’d think smart managers would’ve already “weeded out” the “non-performers” first, long ago, 10,000+ of them. Now all you have is managers left.

    This remaining elite is likely overworked, possibly underpaid and yet has no idea if they’re gonna have a job tmw.

    February 29th, 2008 at 11:54 am by Puddintane

  19. Nortel is making progress, but the story is not being told like it should be. Mr. Z needs to sit down with the NY Times and go over all the progrees that has been made and talk about real new products that are coming to market that will propel Nortel into the leadership position it once had. New management has done a pretty good job of increasing margins and cutting costs, however, management as a team needs to reject the recent raises awarded by the BOD. If they do this it will boost morale tremendously and show that they are true leaders.

    February 29th, 2008 at 9:03 pm by Tommy Jenkins

  20. wow! see a lot of people still holding on. I stopped long time ago as my advisor said it was prudent. also leaving the company.

    about 7 years ago, met some old people whos retirement was wiped out. they were working at a grocery store to work their years. we are there yet again.

    over the years execs keep saying its a good time to buy in. as they say fool me once shame one me, fol me twice shame on you. we now how many times we have ben foold

    March 3rd, 2008 at 11:17 am by advise

  21. It is time that management demonstrate confidence in the company, with share buybacks, more upbeat business reports and a 1-3yrs of future plans.

    Otherwise, this company will become a history in next 6months.

    March 3rd, 2008 at 4:45 pm by Nortel Loyal

  22. No one here blames the biggest culprit of all, yes it is Mr Bush….who has done more damage in past 8yrs than anyone else on this earth.

    March 3rd, 2008 at 4:47 pm by Nortel Loyal

  23. Nortel Loyal - I thought Frank Dunn was the biggest culprit of all…? I expect him to be implicated in the sub-prime mortgage debacle any day now. ;-)

    March 4th, 2008 at 7:52 pm by Another Nortel Watcher

  24. … his indictment on global warming charges comes first…

    March 5th, 2008 at 6:31 am by Required

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