Intellectually, I feel that this is the right thing for Nortel because what the company needs more than anything else at this time is agility to maneuver in a complex market. By having discrete business units and eliminating a complex matrix organization that we have historically operated within, the individual BU's can make quicker decisions, optimize their processes and structures, make strategic partnerships, and adjust technology and market strategy far faster than before. The trade-off will be that the company will lose some of the leverage and efficiency that a more central model provides, but in all decisions there are costs and benefits.

I have spoken many times about the fact that the industry we are in is changing and that change is happening faster and more dramatically than anyone expected. We have seen the movement to software, applications, and interaction with the IT ecosystem occur at scale in the last year. We have seen networking companies either try to become IT companies or, in Nortel's case, partner deeply with IT companies such as IBM and Microsoft. We have seen WiMAX not just emerge but mature in the span of two years,  and we have seen LTE accelerate by five years forward. In general, even the ambitious projections I made two years ago seem to have happened faster than we predicted from a technological and market transition perspective.

With this rapid change, the most important element of any company is to be able to keep pace with that change and capitalize on it. That translates into agility and speed and even if you must take some risk on scale and efficiency to get that, it is clearly worth it. As Nortel transforms into this BU formation, we will be a company that has discrete and fully integrated focus on the enterprise evolved market and the next-generation carrier market. Each of those BU's will be lean, focused and autonomous and with that posture will have an increased capability to make rapid decisions and execute in their markets. It is also clear that each of the BU's will need to execute its own path because even if the speed of change is uniformly rapid in carrier and enterprise, the composition of the market and the opportunity of each are different.

Personally, I am comfortable with this direction even if I am not a part of the path forward. I was brought into Nortel to help correct many years of neglect on R&D and to get it into a position from a technology perspective where it could go forward. I believe that has been accomplished. We have clearly developed new and innovative technology that is core to the new strategy (unified communications, LTE, web 3.0 collaboration, open source voice, agile communications environment, among others). We have also transformed, cultivated and cared for the R&D talent of the company to prepare them for the next chapter; have raised our visibility in the technical dialog to a level that had not been seen for a long time (consider how often Nortel technology was the lead story 3 years ago versus today); and  have created a set of new cultural and technical capabilities (such as applications development, IT/Telecom interaction, open innovation, incubation, agile development, ecosystem leadership…) that were absent but needed in order to go forward.

In the new formation, the global CTO role is not necessary and, as such, I will move on at the end of this year and pursue the next challenge. Until then, I will continue to support the Nortel community and assist in any way possible to make sure that the path forward is successful. I have nothing but deep regard and admiration for the teams in the R&D community here and believe that once they are settled into the new BU structure they will continue to be a bright light of opportunity for the industry and the most significant source of innovation in our market.

Thanks for your support and opinions and for the dialog on this blog (even when it was sometimes hostile and angry). A blog is not a controlled forum, nor should it be, and even in the most frustrating times I believe that this forum has raised the visibility of the R&D assets and people of Nortel who, in my opinion, are second to none.

I am, as many of you know, an optimist. I am also a strong believer that this industry is still exciting and full of new challenges and opportunities for innovation. I believe that mostly because of two facts: first, we have not even come close to connecting everything and everyone who would benefit from being part of the communications ecosystem; and, second, that the existing communications and collaboration experiences we endure are not even close to being as seamless and effective as person-to-person face-to face collaboration. Those grand challenges are what excites me about the future and should excite you about the opportunity for companies like Nortel as they evolve forward.

This is a small industry, so I hope that at some point in the future we will have the opportunity to meet and/or continue our dialogue. I look forward to that.

Until then, I wish you the very best.

Within those constraints, however, there are a still a number of questions and comments that I can tackle at this point.

In response to Another Nortel Watcher’s comment (#7): "There are a lot of pro-Nortel people starved for even small tidbits of positive information that they could use to fuel their ongoing support … . The company is in flames and you post threads on the Nortel IT department and a show-and-tell session in the labs...?

In terms of why I would choose to post a guest entry from our CIO Steve Bandrowczak at this particular time … it was timely (the new IT site was launched the day before) and our IT infrastructure and the way we run this company is of interest to many of our customers who want to know how Nortel uses its own technology to solve real business problems. With respect to my post around the Advanced Technology Summit ... again, it was timely, and despite any current internal activities underway, it’s critical that we continue to dialogue with our customers, which is certainly in the best interests of all shareholders. ATS was also incorrectly described by Lawrence (#12) as a "sentimental journey" by management. It is nothing of the sort. It’s a time when some of our most significant customers come to visit us and learn about and collaborate with us on new technologies. In fact, ATS, with the exception of executive update presentations, is almost entirely interaction between customers and our R&D organizations. To me, you can and should consider ATS a "tidbit of positive information." I was hoping the message you would take away from that is that despite the current environment, customers are still making the trek to our labs to talk about their future and Nortel’s role in it.

I think it’s also important to emphasize that there are many other places to get "positive tidbits of information" about Nortel, and I sincerely hope that you do not use this particular blog as your primary source. In October alone, for example, we issued some 20 or so press releases that talk about various customer wins, which I think provide some positive information and a clear message: despite the current environment, we continue to win customers and contracts. I encourage you to have a look at our recent announcements at this link. Our Buzzboard blog, which Bo Gowan runs, also does a good job of highlighting news of the day and contract wins, and Phil Edholm covers a number of topics that highlight our specific efforts in the Enterprise space.

A number of you (e.g., ANW #7 and Torben, #1) have also commented on what you perceive as a lack of correlation between our technology development and business and portfolio strategy and performance. I think the company as a whole does a very solid job of making that linkage and there are plenty of places where you can get that data if you are looking for more detail than what I talk about on this blog. One great example is the presentations from the all-day Financial Analyst Conference we held June 11th, which I’ve referenced before. During that session, each of our four major business unit presidents (Enterprise, Carrier, Metro Ethernet Networks, and Global Services) addressed total addressable market, product portfolios, market CAGR, Nortel market share, and operating models for their areas of focus.

As was obvious and transparent from those presentations Nortel has a diverse set of products and a diverse set of markets, with varying ranges of profitability. They range from those that are highly profitable to those that are just breaking even, to some that are losing money, to those that are not yet profitable, largely because they are early markets or bets Nortel is making on new market opportunities. www.nortel.com also provides a lot of information about our product portfolios and how they fit within the context of the company’s overall strategy and where our differentiation lies. At our Investor Relations site, you’ll also see that our CFO Pavi Binning and our Enterprise President Joel Hackney are both scheduled to present at Technology Conferences in mid-November (and you’ll have access to those presentations via the Investor Relations link).

On a related topic, Torben (#1) has commented: "I’m of the opinion you have completely misunderstood your mission in life: to ensure that Nortel’s product portfolio at all times is optimized to deliver sustainable profitable growth." I assure you, Torben, there is no misunderstanding on my part, and that has been one of my primary focuses since coming to Nortel. "Sustainable" is definitely a key word. When I joined Nortel, we were spending about 55% of the $1.7B+ R&D budget on product development in markets where the CAGR was negative. Obviously, that was a huge issue. Today, as the result of the work of a lot of people, we’ve reached the R&D spending model we were targeting, of 20-60-20 (20% of the budget focused on new opportunity, 60% on established markets with positive CAGR, and only 20% on declining/negative CAGR markets). To make that change, we evaluated every product segment, its cost structure, and its R&D model. It took some time, but we’re definitely within that range.

And, finally, to address the comments around financial discussions. Another Nortel Watcher (#7) accurately and succinctly summed up the restrictions I’m under when he said, "…this blog is not the place to discuss Nortel financials. Even if it were, SOX rules would make it impossible to speculate on anything financial in nature that hasn’t been released through more formal channels. So to all those who are posting here and looking for financial information of any kind, my advice is to redirect your passion because it would be illegal for Mr. Roese to enter into the kind of dialogue you’re so passionately seeking." Well said.

I realize I have not addressed all of your comments and questions, but hopefully I've covered some of them. Given current restrictions and regulations, many of them will have to wait until after the earnings call with Mike Z and Pavi Binning on November 10.

Before I discuss our annual Advanced Technology Summit (the focus of this post), just a few reminders in response to some of your recent comments. Although I certainly appreciate and understand your desire to have a dialog on share price and financial performance, and to express your opinions on the leadership of the company, I just want to reiterate what I’ve said in the past – i.e., that I am not going to engage in a dialogue on those topics in this blog. This is not the forum for that discussion. In the spirit of being open, you may have noticed that we have not edited out "off topic comments" because I respect your right to speak your mind, but please don’t expect a corporate dialog or response from me to those topics on this particular blog. If you do, you're going to continue to be disappointed. I encourage you to direct that dialog to Buzzboard or forums that can engage you at a level that might be more satisfying for you.

On to the topic of the day - our Advanced Technology Summit and the engagements we continue to have with customers...

For those of you who have followed Nortel for a while, you may know that every fall for the past six years we’ve hosted an event in our Ottawa labs called the Advanced Technology Summit (ATS). This is a month-long event, where we essentially open up the labs to major customers, so they can each come and spend a few very tailored and customized days with our R&D teams and do deep dives into the products and technologies we are developing.

Our first Advanced Technology Summits were focused exclusively on optical and transmission technology and targeted for those specific customers, but for the past two years we have expanded the scope to include wireless, voice and enterprise technologies and some of our new software and applications initiatives. We also invite analysts, media and other external industry groups to visit, and hold a special all-day event for employees to see what the other groups are working on.

Although we host thousands of customers throughout the year in our various facilities around the world, ATS is unlike most customer visits and events. It is an opportunity for customers to spend a few days with our R&D teams to really understand and evaluate the current and future technology at Nortel. Feedback has been very positive from customers, who say they appreciate the openness and detail and unprecedented access to the R&D teams. We also find huge benefit in having these extended sessions with our customers.

This year, even with all of the economic pressure on the industry and the noise in the system, ATS is turning out to, once again, be a well-attended and valuable event. We are about half way through it now, and by the end of the event will have hosted more than 50 major customer groups (multiple representatives from each customer) from some of the most significant operators and enterprises in the world

This attendance is in line with previous years, and by any measure is a huge success, but when one considers how much budget and time pressure is on everyone in the industry right now, for this kind of attendance to occur the value of such engagement must be high.

I thought I would share with you a small sampling of the types of demonstrations and deep-dive sessions people are making the trek to Ottawa to participate in.

• There are 8 different sessions covering Global Services and Solutions. Among the areas of focus are: web.alive (an incubation 3D collaborative Internet experience, which I’ve blogged about before); our unified communication solutions for enterprises; tele-presence; and our secure portable office technology (which reduces all intranet remote access and apps to a memory stick-based secure client for secure remote access from any device).
• There are 6 sessions on voice and wireless convergence, including focus on fixed mobile convergence (FMC) solutions, carrier-hosted unified communications, and Long Term Evolution (LTE). In case you missed it, Nortel is the first and only carrier wireless supplier to demonstrate live handoff and real world LTE to date.
• There are 9 future technology sessions, including everything from utilizing Tru2Way in cable environments for unified communications and real-time functions to applying social networking concepts and technology to enable real-time collaboration. As I have blogged about before, as the IT and telecom worlds converge, an entirely new paradigm will be created for our industries. These future technology sessions are showing live systems doing exactly that.
• There are 7 infrastructure-centric sessions dealing with advanced photonic systems and technology, 40 and 100G robustness, the optical transmission future beyond 100G, new management capabilities for faster, simpler operations, various WDM access and metro-area systems, and the distribution of timing in wireline and wireless networks. Many in the industry have not yet realized that for the packet world to replace the TDM world, one huge gap that must be addressed is the ability to reliably deliver timing and frequency capability across these new systems. Nortel has been developing multiple methods to achieve this and is now demonstrating real-world systems that can apply timing distribution over even a carrier Ethernet environment.
• There are 11 applications and solution-oriented sessions, including our WDM-PON solutions, carrier Ethernet, Ethernet next-generation data center solutions, and mobile backhaul.
• And, finally, we have multiple open forum sessions with our lead R&D talent and our customers to have candid dialogs about unmet needs, competitive gaps and just simply to become more closely aligned.

I hope this list also helps address some of the other comments that have been posted recently and to reassure you that the fundamental R&D capacity of Nortel to both invent and deliver world-class technology is strongly present here. I have seen comments to the effect that no new products are being delivered. Well, that is simply incorrect. Last year, we delivered almost 200 new products. I have also seen some suggest that "no one buys your products or sees value in them." Well, that is also wrong. With revenues of about $11B last year, clearly customers are selecting Nortel and implementing our technology, and we continue to announce customer wins, even in these challenging times.

And, finally, I have seen comments that imply we lack differentiation and an ability to lead in technical areas. Again, this is wrong: we are the recognized leaders in 40/100G optical transmission; we are the recognized leaders in unified communications (which Gartner just reaffirmed by positioning us again in the Leaders Magic Quadrant); we are the first movers in LTE; we have products that have no analog from our competitors (such as web.alive and our Agile Communications Environment (ACE)); and - of true significance - command #1, 2 or 3 market share in a large number of segments. And, just this week, we received best in show at the Advanced TCA Summit in two of the four award categories: the "Best Infrastructure Product" award for the Nortel Versatile Service Engine; and the "Best Unique Customer Application" for the Nortel All-IP Next-Generation Voice Core Mobile Switching Center.

Moreover, the fact that even in today’s environment dozens of major customer groups are willing to come to Ottawa for extended sessions to do deep-dive interactions with our R&D teams at ATS this year tells me that our customers appreciate the value of our technology and our R&D teams in solving their business problems and making communications better.

Although there is much uncertainty in the world and the industry today, the one thing I am sure about is that the technical community in Nortel is second to none and they continue to bring true value to Nortel, the industry, and our customers.

That's becoming increasingly important as the IT and telecom worlds converge and as the need to work as part of a broader ecosystem becomes more critical. Steve has been one of the loudest proponents within Nortel of ensuring that our technology is developed within a solutions context, that it has real-world value, and that it positions Nortel well as a strategic participant in the enterprise space.

I invited Steve to do a short post on some of his thinking and on the new Nortel on Nortel website that he launched last week.

Steven Bandrowczak

By Steven Bandrowczak, Chief Information Officer, Nortel

Let me start by saying I'm a CIO to the core. I have been the CIO at Avnet, DHL Worldwide, Lenovo Group, and now Nortel. I know first-hand the challenges a CIO and his team face running a global enterprise. But I have to confess that until I joined Nortel last year, I was unaware of what solutions Nortel had to offer until I learned how we are using them internally to run Nortel.

I found out that by implementing our own UC solution at Nortel, we saved over $12 million annually. I learned that we are consolidating our voice infrastructure from a highly distributed to a centralized architecture to improve operational efficiency and save $4.5 million in operating expenses. As part of our award-winning teleworking program (which avoids millions annually in real estate costs), we provide our home-based workers with secure, reliable IP phone service that's identical to that found in the office for an annual saving of $1200 per teleworker.

For a guy who always, always, always wants to know the business case for implementation, I was blown away. Everyone on my team recognizes that if the business case for a Nortel solution is not realistic for us, then it won't be realistic for our enterprise customers.

If there is one thing I've learned in my 25 years as an IT professional, it is the intrinsic value in talking to peers and sharing experiences. Let's face it. There's nothing better than learning from somebody who's been through it, somebody who can talk the same language, somebody who has had the same experience. That's why I spend 40% of my time visiting with Nortel's enterprise customers, discussing the business cases associated with our use of Nortel solutions and brainstorming ways in which these solutions can bring them value.

I challenged my team to find a way to broadcast our good news story about using Nortel solutions, and to do it in a way that would go directly to the hearts and minds of those that steer technology decisions and purchases – the IT working level.

My team has met my challenge with Nortel on Nortel.

At this site we share our real-world experiences solving problems using Nortel solutions, our business case results, and the tough lessons we learned along the way. The team has even gone as far as to release tools developed in-house to help manage our network. My favorite is one that lets a user load their existing Cisco CatOS configuration file into a tool to help generate the associated configuration for the Nortel Ethernet Routing Switch 5500.

I encourage you to check out Nortel on Nortel. Tell us what you think and what problems you are struggling with in your enterprise.  Send me and the team an email directly at talkIT@nortel.com.

In this post, I wanted to take the opportunity to address three specific comments: one from Another Nortel Watcher (#29), who said: "Don't you think a couple of comments with the Nortel CTO perspective of the market dynamics and the wisdom of the MEN sale would be of benefit to the shareholders and the employees?"; one from Bill Stock (#33) who wrote "I do hope … that the announced intentions of wanting to sell the MEN unit along with confirmed additional restructuring will be the catalyst that will initiate a much more focused Nortel"; and one from Nortel Shareholder (#37), who asks "Why are you selling one of Nortel's crown jewels?"

Let me address those particular comments by offering the following, which I think is pretty consistent with what you've been hearing from other Nortel executives, and which I have been discussing extensively with customers and employees (through a number of employee town halls and skip-level meetings) over the last two weeks:

• Our decision to divest the MEN business is an outcome of a process that has been going on for the last two years to determine where this company can best compete and where the greatest opportunities lie. Although we've clearly tried to make all of our businesses successful, it has become increasingly clear in today's economic environment that it is no longer practical to pursue that strategy. We need to choose a focused and prioritized set of markets and technologies in order to de-risk our opportunities to grow.
• Although we have great technology in MEN – world-leading technology, in fact – the reality is that our optical business is a very different one than most of Nortel's other businesses. As an infrastructure business, its operating model (including processes, value proposition, and focus on "heavy iron") differs significantly from the operating model of the rest of Nortel. Moreover, we expect these models to diverge even more in the next several years, which would add further complexity to our overall operations.
• While the decision to divest MEN was not an easy one (particularly given its technology leadership and its extremely talented workforce), it is the right one if our goal is to focus the company on a more specific set of high-growth, solutions-oriented, next-generation experiences – such as next-generation carrier and next-generation enterprise.
• The intent to divest MEN is also not out of alignment with what we've been saying for the past two years – specifically, that the future of this company is around solutions, is more about software than hardware, and is more around value to the end-user, with a higher level of interaction with customers. For the last two years at least, including at our Financial Analyst events (the most recent which was in June this year), we have be talking about this strategy.

Nortel has been through these changes before and has continually and successfully reinvented itself. In fact, in the early 1900s, Nortel was the world's largest manufacturer of sleigh bells of all things. We also used to manufacture optical fiber. And, until the late 1990s, Nortel was a "world-leading telecommunications manufacturer". Within the last 10 years, we successfully divested and/or exited from all of our manufacturing facilities – some 26 plants worldwide – to become known and recognized as a world-leading network provider. In other words, we went from being a world-leading telecom manufacturer to being completely out of the physical manufacturing business in a few very short years.

To Bill Stock's comment, I do believe the announcement two weeks ago will be a catalyst for focusing this company going forward – specifically on next-generation enterprise and next-generation carrier solutions, where we are making significant inroads and where we have the potential to clearly differentiate ourselves. [Today, we are #1 in Carrier VoIP, #2 in enterprise VoIP, #2 in contact centers, leaders in unified communications (per Gartner's 2008 Unified Communications Magic Quadrant report, etc.) and we have strong partnerships with IBM and Microsoft. All of these are consistent with the kinds of markets we believe have the greatest opportunity for Nortel going forward, and are very much related to one another.]

Jay Cuthrell (#32) captures our ultimate goal very succinctly: "Perhaps one day … the employees of Nortel will be able to navigate and position themselves as masters of the new media around them and be able to break it down to anyone they meet on the train, across a dinner table, or to their own family members and non-tech friends — and show how Nortel vision makes it all possible."

Before closing, I wanted to highlight one very significant achievement on September 18th that was overshadowed by the MEN announcement. That was related to our technology leadership in next-generation wireless. With T-Mobile, we conducted the world's first successful live test of LTE under every day conditions. While technology achievements like this do not guarantee market success, they do point to the world-leading technical expertise within Nortel and our ability to lead in industry change.

In terms of a next-generation Enterprise example, I also wanted to flag for you yesterday's announcement, which talked about Nortel being selected by HSBC for a next-generation unified communications solution that will enhance HSBC's business and support processes. Leveraging our Agile Communications Environment (which is based on SOA and Web services), we worked hand-in-hand with HSBC to develop a solution to meet their needs for an integrated, unified communications infrastructure.

This is a good example of the kind of technology and solutions Nortel will be delivering more of in the future. These kinds of systems and wins are capitalizing on the ongoing convergence of telecom and IT and the new opportunities that are emerging as a result of that convergence.

In the meantime, I wanted to spend a few minutes discussing something I have been following for 10 years and have even had some involvement with: the Large Hadron Collider at CERN (the world's largest particle physics laboratory).

The LHC, as it is known, is the single largest machine ever built and the biggest scientific experiment ever conducted on the planet. You can read more about the LHC and its objectives here and (assuming you are part or all geek) I think you will find it fascinating. Even if you're entirely non-technical, the LHC, which went live this week, got some significant press as the mainstream media picked up on some views that this experiment – which "was going where nobody has gone before" – could have unintended consequences (such as the end of the planet). Well, obviously we are still here, so things are good so far .

What I wanted to talk about was the information and networking technology underneath this system because it illustrates how important IT capacity and capability are to almost everything we experience today.

Behind the 27 km super-cooled superconductive proton accelerator and its detector experiments is a network and compute infrastructure that, on a global scale, is as ambitious as the core physics experiment taking center stage. The data grid that will gather and process the information the LHC will collect is absolutely huge. Over 100,000 CPUs will be needed to churn the data collected continuously over the 15-year life span of the project. These CPUs are connected in some of the largest data centers in the world using a minimum of one-gig and in many cases 10-gigabit/sec interfaces per node.

Every year the system will generate 15 petabytes of data for analysis (that's 15 million gigabytes if you need a reference). The two tiers of compute will include over 500 institutions around the world and, at any given time, upwards of 5000 scientists will be accessing the data. And, all the data collected from this week until the end of the 15-year project will need to be stored and made accessible to the research community.

For those of you who want to see the real time data behavior of the LHC, if you go to
http://gridview.cern.ch/GRIDVIEW/ you can view the operational status of the data grid and see how much bandwidth the system is generating and how many compute jobs are running. It's interesting if you're an IT person because most corporate IT shops use similar tools to make sure their systems are operating, but for comparison purposes the scale of the LHC makes most (but not all) IT shops look pretty simple. Maybe you can benchmark your internal IT complexity to the LHC and in your next performance review tell your boss (who probably knows what an LHC is thanks to the media this week) that your IT complexity is equal to .7 LHCs .

By the way, the reason I am blogging on this is not just because it's interesting but because in my career one of the most interesting environments I have had the pleasure to work with was the openlab effort at CERN. I had the opportunity to go into the tunnels as they were building this project, to see the raw science and even to give a keynote at the 2004 CHEP (Computing in High Energy and Nuclear Physics) Conference in Interlaken, where CERN celebrated its 50th anniversary. 

I am a bit of an LHC groupie and am personally excited to see this project go live. It will possibly show us two things: first, it may unlock some of the secrets of the universe by simulating moments after the big bang; and, second, it will show us again how IT and networking systems play a huge role in enabling almost everything we do today on this planet.

As a final note, if you don't want to delve into the technical details of some of the links above and below, you can read a pretty good fictional work by Dan Brown called Angels and Demons, where CERN and the LHC play a leading, although fictional, role.

Congratulations to the team at CERN and the openlab for a fantastic milestone!

*************************
Some links you might be interested in:

CERN in 3 minutes video

LHC Rap (A somewhat silly but informative summary of LHC)

LHC Overview (less silly)

New York Times Article

Computer Weekly Article

"I find real value reading your blog, and always learn something, but what really bothers me are some of the comments that people leave, and why we as a company allow that. A lot of comments are valid and they add insight to the discussion, and I think that's a valid and good use of a blog. Gets a dialogue going. What I don't agree with is the fact that we let a handful of people, and they're always the same people, rant about the Nortel stock, our leaders, etc. Why are we providing a public place for these people, most who seem to be disgruntled shareholders or ex-employees? Do we really want a blog that we promote on our homepage to provide a forum for these people who seem to be allowed to say anything they want while hiding behind an alias? Maybe you should consider closing off the comments section. I think we do more harm than good by letting this very vocal minority dominate the dialogue with comments that are completely off topic and add no value."

I've thought about that very topic myself over the last several months, so thought I'd open it up for some discussion.

When I started the blog in January 2007, I think I was pretty clear on its purpose - to provide a forum to discuss the industry, technology, and Nortel's vision and strategy. Some posts have generated some very good discussion and dialogue, and those have been terrific. I always value opinions, even if (or perhaps especially if) they are controversial. I have no issue with comments that question or challenge a direction. We don't all have to agree.

The "off-topic” and, in many cases for me "off limit,” topics (as an officer of the company, the bottom line is that I can't comment in this forum on stock price, financial guidance or potential M&A activity, for example) degrade the quality of the dialogue and distract from what, I think, people come to this blog to read about. No answer that I could provide would address the frustration underlying some of those comments, and because of this people who post what they believe are valid comments expecting a dialogue from me are left wanting. It's a no-win situation. Do we let people continue to use the blog to start these unresolvable dialogues? Do we delete off-topic comments? Do we stop doing the blog completely and I just post a number of white papers?  What are the options?

So, as you can see I'm re-evaluating the blog and I would like your input to help shape its future. I'd particularly like to hear from the silent majority. According to our statistics, more than 10,000 of you read this blog every month, so I'd really like your input on its value. I'd also appreciate some insights from other bloggers in the blogosphere. How do you deal with this?

There are three ways for you to weigh in (choose one or choose them all)...

1. Take the 3-question poll below. Simple and fast. And completely anonymous.
2. Send an e-mail directly to me at: ctooffice@nortel.com
3. Leave a comment in the Comments section of this blog. For those of you who have never left a comment on a blog before, just scroll to the bottom and type your comments into the comment box. The user name you choose to use will be posted, but your e-mail address will not be. You will remain anonymous.

The goal of this reevaluation is not to de-commit from having a public dialogue, but instead to ask the serious questions about what have we learned from the 1.0 version of this blog for the last year and half, and what should the 2.0 version of this blog look like?

Thanks. I look forward to your feedback.

I think we’ve been pretty clear about our strategy. We are transforming Nortel to be a company focused on capitalizing on the trends of Hyperconnectivity. Our key areas of focus are: 1) to accelerate the shift to a true broadband world (where capacity and availability of mobile, low-cost bandwidth is made possible at an order of magnitude improved economics); and 2) to communications-enable the applications and IT world (where the tools and capabilities of telecommunications become accessible to any interface, application or  business process in a simple, well-integrated and seamless manner).  I talked more about this strategy (and positioned it in terms of the “supply” and “demand” side of Hyperconnectivity) in my July 14th post.

Over the last year, we’ve undertaken a host of tactical activities to capture the opportunity articulated by our strategic vision. I won’t list all of the activity here (too many, and much of it was covered during our recent Nortel Analyst Day) but among the most significant: we’ve rebuilt the senior leadership team; we've transformed our business operations to drive a totally different economic equation (the result is our gross margin and operating margin have improved dramatically both in terms of trajectory and absolute values); we've refocused our R&D model to direct more investment to the future (we went from 55% legacy R&D to about 20% and shifted huge R&D spend to future technical areas and investments); we reorganized our global R&D footprint to give us a skills-based R&D model aligned for the future; we established partnerships with the leading IT companies in the world (Microsoft and IBM); and we've made countless other changes that are tactics aimed at making Nortel’s strategic vision real.

I wanted to focus this post on another form of tactics – small, targeted technology acquisitions. Over the past three weeks, we’ve announced three of them. When you have clarity of vision and commitment to a strategy - which Nortel does - tactical acquisitions can accelerate the execution. I want to take a few minutes to talk about our three recent acquisitions.

Novera Optics is a technology company we have been working with for a while that specializes in WDM-PON (wave division multiplexing passive optical networking). Many years ago, Nortel exited most carrier wireline access technology markets (DSL, for example) so we could focus on our core businesses but also because the cost of being in that business and being a profitable player at that time was questionable because of commoditization and too many divergent, short-term technologies.

Unfortunately, the reality of fiber access today has been primarily delivered via shared systems such as EPON, BPON and GPON. Additionally, each is slightly different and the fragmentation of these technologies makes for a very difficult market for those who participate in it because none of the technologies is fully complete nor do any of them achieve true critical mass economics.

At Nortel, given our huge understanding of optical systems in the core, it became clear that the ideal fiber access technology would be a simple WDM system that provided a “wavelength to the user”. Such a technology did not really exist a few years ago but over the past few years we have been working with companies like Novera (via our LG-Nortel JV) to demonstrate and even provide early deployments of WDM-PON technology.

Its advantages are clear. It is dedicated, not shared, capacity; it is far more passive than GPON, EPON or BPON; it scales better; and it has similar or better capital costs than the others with far less operating cost and complexity. After working with Novera to develop this technology and after proving it is in line with a new end state for fiber access, we made the decision that it would be to our competitive advantage to have LG-Nortel acquire the technology. Although WDM-PON is not yet fully mainstream, we have enough traction and interest to confirm that inevitably this technical approach is the long-term path for fiber access. It is also highly complementary to our optical business and, as such, makes sense for Nortel. It also gives us a technology that supports our focus on true broadband because it drives down the cost and complexity of access at an extraordinary rate and makes abundant, simple capacity available to users.

Pingtel's business was acquired by Nortel August 8. First, some disclosure. At one time I was on the advisory board of Pingtel but it’s been many, many years since I’ve been involved with the company. I was “reintroduced” to them when Nortel selected them as a technology provider for some of our small business IP based voice systems. (I excused myself from that decision to avoid perception of conflict of interest.)  

We originally engaged Pingtel to work with us to leverage the open source software base of its product to create a new class of small business voice system. We also worked closely with companies such as IBM and Dell to take advantage of world-class “off the shelf” hardware. This combination of the open source leverage of some of the software and the computer industry’s leverage of general-purpose hardware created a very different class of call server. That initial engagement in creating our Software Communications System 500 was new territory for Nortel but seemed to be in a space that inevitably the industry would need to operate in. After a year of real-world experience and actual delivery, it is now clear that this model does indeed meet a market need and gives us both a speed and cost advantage over our competitors in this segment.

As such, having proof that it works, we made the decision to acquire the expertise behind the technology so that we could accelerate our execution in this segment. With Pingtel’s technology and team, we have created increased scale and differentiation in a very significant emerging segment of call processing and real-time and unified communications delivery to the market. We have always said that the vision of unified communications and communication-enabled applications is not just for the large enterprise or corporate campus but should also be able to reach any enterprise, any individual and any organization. Expanding our capability in the smaller sized customer segment with novel systems like the SCS500 directly supports our strategy.

DiamondWare was acquired by Nortel today. This company is a leader (in my opinion, it is the  leader) in advanced spatial audio systems and associated technologies.

About a year ago we began (or restarted after a multiple-year hiatus) funding incubation programs in Nortel. These startups inside the company are focused on truly disruptive or innovative new areas of collaboration and communications technology. One of those areas, which I blogged about in March, uses mixed and virtual reality as an interface for communications and collaboration. One of the key technologies in that immersive experience is a rich audio capability that not only sounds clearer via wideband codecs but also has spatial reality, where virtual entities can interact based on proximity -  both visually and in the audio domain.

In the development of our systems in this space, we evaluated a number of approaches and ultimately found DiamondWare to have not only the most effective but also the most mature and scalable system, expertise and technology in this domain. We worked closely with them and demonstrated their technology as an element of our overall system. Based on exceptional feedback from early customers and great technical interaction, we concluded that an acquisition made sense to accelerate our move to these new immersive clients and environments for the new communications world. All of their technical expertise and capability – which goes beyond spatial audio – is in line with our vision and strategy of creating better, more realistic and more useful communications and collaborative experiences as communications and IT converge. Again, very consistent with the overall vision of the company.

You might be interested in the announcement we also made today about web.alive – the first application we’re developing that incorporates DiamondWare technology. This is the application behind the virtual employee session I blogged about in March. It is a virtual world software application that can facilitate internal collaboration as well as customer and partner interactions over the web. It leverages things like spatial, high-definitition audio, identity, and presence that is integrated with corporate systems and software to create a truly “real-life” experience in a virtual world. You can hear directly from the chief architect behind web.alive and see a video of the solution here.

In summary, you must use many tactics to execute on a strategic transformation. Some are financial and operating transformations. Some are people transformations and organizational renewal. And some are capturing relevant external technologies to secure and accelerate your ability to reach leadership ahead of your competitors.

Expect us to continue to use every tactic necessary to win and complete our transformation but recognize that everything we do is aligned to a clear vision of the future and the need to get there ahead of our competitors.