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Nortel to enforce 6% rule in market decisions

Posted by iTech - 2006-04-09

Nortel Networks Inc. will consider exiting any market in which it holds less than a six percent market share, executives said at a CTIA press briefing Thursday night.

Nortel chief executive Mike Zafirovski said that Nortel plans new and aggressive forays into both WiMax infrastructure and IP Multimedia Subsystem equipment, but added that "our financial realities dictate that we must choose our served markets."

The company already has determined that it will stop further development in service edge routers, where it has developed internal products and acquired architectures from companies such as Shasta Networks. Zafirovski said that he believes a strong IMS portfolio includes an array of soft switches and media gateways, but said "we can offer and end to end solution and still consider partnering for some elements we may be missing."

Alan Stoddard, general manager of carrier multimedia networks at Nortel, said the company is paying close attention to the dangers of adopting too narrow a strategy in markets such as IMS, where it does not want to be identified as a vertical supplier of only session border controllers, for example. Nevertheless, Stoddard pointed out that the new strategy fits a general trend of the last two years of outsourcing most manufacturing, as well design engineering for new generations of mature products.

"When common platforms such as those based on ATCA (Advanced Telecommunications Computing Architecture) are used, we can focus on software content," Stoddard said. "But there are still hardware categories like base stations where proprietary designs are preferred."

For its WiMax solution, Nortel will not leap straight to 802.16e mobile WiMax infrastructure, but instead will offer 802.16d and e solutions, even though many recent startups in the wireless broadband field have declared 802.16d dead. Mark Whilton, vice president and general manager of WiMax products at Nortel, said that analysts often forget about the lower-frequency WiMax products that replace wireless local loop or MMDS systems for emerging nations. Nortel sees as much growth potential in the "emerging nation backhaul" applications for WiMax as the personal Internet access applications for 802.16e.

Whilton said that the latter standard has been designed for low power and for mobility, and he expects WiMax clients to move at least as low as a small notebook computer or desktop, and possibly directly into a handheld phone.

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