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dav_006
dav_006
12/5/2012 | 4:08:22 AM
re: Neptune Changes Orbit
Sure large companies have the innovative and entrepreneurial sprit, but it is a cultural thing for example IBM uses itG«÷s handbook to infuse an entrepreneurial spirit into its culture called G«£Changing the WorldG«• which has helped it to reshape the company. In GE they promote G«£product championsG«• where ideas can come from any one in the company and they would work on making it into a commercial product, and then also sell it to other companies.

To be innovative sure you can do what Cisco does well by buying intellectual property which is then successfully integrated and then uses its very powerful marketing arm to hit the 1 Billion Dollar business. Companies like Nortel and Lucent need to uses its economy of scale, and ensure they drive out as much of the cost down as possible (this is also innovative) and pass on the benefits to the customers that would appreciate the value. Nortel and Lucent have very large portfolio of products but lack the ability to integrate them well in order to provide value to their customers, the close integration of products can only happen when the multiple layers are removed. Since they have a large customer base they need to form a very close relationship between their customers and their engineers to develop innovative and commercially viable products. If they try to imitate and play catch up it would mean that they have lost the first mover advantage, and while you are trying to imitate the first mover is not going to sitting there waiting for them to catch up.

The reason that Nortel is in this position is because J. Roth did not believe in the internal capabilities of the R&D team and went crazy buying other companies and just lost focus on building and appreciating the companies internal capabilities. Then the company just went crazy and thought that layoff would solve its problems. Finally with all the financial problems G«™ the company lost all focus on what was important for it to survive in the long term. For Nortel to get back to innovating and becoming a serious player will take time G«™ and a CTO would as I donG«÷t think Mr. Z is a technology guy .. but more of an operations person.
inauniversefarfaraway
inauniversefarfaraway
12/5/2012 | 4:08:22 AM
re: Neptune Changes Orbit
It reads as though there is a realistic grasp of what the challenge is for nt.

Management is at the heart of nts problems. The culture is one of squeezing margins. This has meant starving products of innovation by driving the technology out of nt to it's suppliers. After the illusions of better elsewhere came crashing down, divesting became a necessity.

What is curious is that divisions that might have commanded a healthy premium, or gone IPO, before and during the boom years were allowed to wither, commanding a small fraction of the value they represented. This was in-line with management's illusions that these divisions, although key to successful products, could not be too successful for fear of enabling the competition. Amazing that this is still true today.

nt made some decent moves when it allowed the widget makers to deliver. Whenever this would happen, the hawks would move in to reap the rewards, driving out the fools who were interested in technology.

Many remember the years of ideas blooming, until products got rolled out. Then the squeeze was on. Whatever made the product was inevitably ignored, cast aside, or downplayed. This culture led to the acquisition binge when management finally started believing their own propaganda.

Because management forms a block in nt structure, it represents a large visionless liability. The natural evolution is for it to wither on the vine until this management retires. At this point, they will effectively lose control over operations, and a new opportunity will exist for nt to renew itself. It is amazing indeed that this self-defeating attitude can prevail. If current management is coasting to retirement, imagine their surprise one day when the retirement fund becomes insolvent because the corporate corpse they left behind crashes and burns.

nt never got the concept of rewarding those that delivered the goods. Their philosophy was always one of derision, so as to curb them from getting any gratification from achieving.

Cisco is not the juggernaut it appears to be. It is at the opposite end of the spectrum, and often rewards fools, and extreme bad behavior, for small incremental gains. It was never really interested in technology. Management at Cisco understands that it needs new technology to maintain dominance, but it's gotta be commoditized. For nt, it used to be that they didn't mind paying money for exclusivity because they new how to squeeze margins.

In both cases, they are simply using inertia to maintain advantage. This type of attrition only leads to years of stagnation because neither cultivates the skills that delivers innovation.

nt can't build a router because it doesn't want to have that type of free thinking. Besides, there is nobody to take that kind of risk. No one in nt is willing to put it on the line, they are all cowards. Anybody with a mouth is out.

There are plenty of telco paradigms that would make a great router, better than the el cheapo, fly by the seat of your pants router. They just aren't able to cut costs in non-critical areas,a nd put the meat where it counts. Most of this is due to the fact that the edge is gone. The reason that it's not coming back is that those days are gone for nt. Management just doesn't get what made it strong, and how that can be applied to something like a router, screwed up priorities.

As for Cisco, it doesn't have the attention span to really go after reliable iron. Again, everything needs to be commoditized, up to a point.
paolo.franzoi
paolo.franzoi
12/5/2012 | 4:08:20 AM
re: Neptune Changes Orbit

dav_006,

I was responding to stephen's commentary about technological innovation. That is very different than the business innovation that a company like GE shows. As I posted (and may have been read incorrectly), I am convinced that this is an era of telecom equipment that will be driven by business innovation not technical innovation.

That does not mean fine R&D capabilities are not required. It means to me that the major players like Lucent and Nortel are still building their companies to service the market as it existed 10 years ago. One example I attempted to illustrate is the change in ability to enter markets.

Let me give another RBOC oriented example. As much as we all hated paying our OSMINE tax, one could build a product and get it integrated into the OSS environment on one's own nickel. Today, that simply is not the case. This changes the barriers to entry into a market.

What this means is there is significant change in the market dynamics independent of the technological choices. My opinion is these market changes are actually MORE significant than the changes in technology.

seven
stephencooke
stephencooke
12/5/2012 | 4:08:20 AM
re: Neptune Changes Orbit
Seven,

I agree and disagree. When was the last time that a company's stock was unaffected by saying "the customers aren't buying"? When that happens the CEO is generally blamed for any revenue shortfall that doesn't meet analysts' expectations. He tries to resurect the situation single-handedly by going off and making well-meaning acquisitions that really bring little value.

In terms of technology, there are spaces that both Lucent and Nortel should be in right now in a big way and are missing the boat. They were both hot on the optical and wireless trains in the 90's and did very well for themselves. The biggest train around at the moment is in access. Their customers are the biggest carriers in the world who are having major issues fighting competitive access networks.

Both Nortel and Lucent are in the business of providing technology that keeps their customers in business and makes their customers' business better. You have said that wireless is never going to have the bandwidth necessary for things like SDV and certainly not HDTV. So the answer is not wireless (as the major carriers have announced that they are moving to provide these services).

Neither Nortel nor Lucent is a big satellite equipment provider so having their customers move in that direction makes no sense (ie: doesn't improve their equipment sales). So the answer is not satellite.

Both are strong in optics yet neither has made a dent in the FTTH market. I would call this a totally missed opportunity unless they can pull something out of the bag in a hurry. But what proportion of the major carrier networks are being migrated to FTTH? Fios, and...? Nortel was doing PONs >10 years ago so why aren't they there? Personally I think they would be better served by providing an optical ring solution, as BellSouth seemed to be interested in last year.

Nortel got out of the DSL business and is reluctant to get back in because, as one of their spokespeople said "why be #3?" Innovations in DSL at the moment are generally restricted to improving the specs (eg: VDSL - VDSL2) and this is generally done by external component companies who will sell that technology to all comers (ie: no competitive advantage for a Nortel or a Lucent). Going out of the box in DSL is my patent-pending DSL rings idea. Either of them could bring that topology to market but it is beyond a startup.

Take the rings (either optical or DSL), put a WiFi interface on it so the home doesn't have to be re-wired, have the carrier own it as a service enabling platform, integrate a firewall/VPN and run with it. This would leapfrog cable providers' offerings and be in technologies that, currently, Lucent seems to be ahead of Nortel in. If either or both went that way Cisco would be hard-pressed to find a startup to acquire to develop it for them.

When your head is down trying to protect your job it is really hard to sit back and interpret the lint in your navel...

Steve.
stephencooke
stephencooke
12/5/2012 | 4:08:19 AM
re: Neptune Changes Orbit
Seven,

Though I agree with you that business-level innovation is definitely needed by all players, I don't believe that it will happen unless there is a technological imperative to make the carriers look at new business models. Put another way, I don't think wrapping a new business model around existing switching technology will make any difference what so ever.

We are now in the not-so-popular domain of having to change several things at once to regain past successes. Not only that but you also have to get your customer to realize this and move them in that direction. A good helping of evangelism and an out-of-the-box technical vision would seem to be tablestakes here.

Steve.
paolo.franzoi
paolo.franzoi
12/5/2012 | 4:08:19 AM
re: Neptune Changes Orbit

stephen,

Here is the thing. I will stop being a bit obtuse.

Let's use DSL as an example. Market shares are fundamentally set. Unless there is a market disruptor coming (and IPTV could have been), they are going to remain approximately the same. Showing up with new technology does not amount to a hill of beans. It's too late. The only DSL strategy that is working in a late to market approach is Adtran's. They will suck up all the (this is NA/Europe focussed) non-Alcatel business they can. They will fill the niches. That does not work for Lucent and Nortel.

Go disruptive or go home.

By the way, they have already missed the fiber access business. It's too late for them already.

seven
zoinks!
zoinks!
12/5/2012 | 4:08:14 AM
re: Neptune Changes Orbit
I don't think anyone has asked the question about what the move into wireless means?

If this box is for moving packets and doing router like functions, its best in the core of a wireless network. The PDSN/GGSN/SGSN markets are not that large and i think are already mostly locked down.

What's left?
sgan201
sgan201
12/5/2012 | 4:08:13 AM
re: Neptune Changes Orbit
If you take away the PDSN/GGSN/SGSN, BTS, BSC, Node B and RNC but focus only on the boxes that connect the PDSN/GGSN/SGSN, BTS, BSC, Node B and RNC, you have one of the fastest growing business at this moment.

Dreamer
lucifer
lucifer
12/5/2012 | 4:05:54 AM
re: Neptune Changes Orbit
Very little real discussion here, what's up with the Neptune/MPE group at Nortel?

I hear that McFeely is still there. He was challenged by an employee recently on how he could retain his position given his record?

Before we hear his answer, let's look at the record:

Shasta disintegration - he ran this team and did so well he was promoted to run the entire data group. Shasta is on its dying breath

Passport, the only money making product in Nortel's Carrier Data Portfolio, has been starved of funding and resources to pay for Neptune. Don't milk the cash cow, kill it!

Neptune - what was it $250M in development, 2 1/2 years late to market? And when it came it was too little too late! Not big enough for IPTV Metro, too small for IPTV Access. Didn't fit the BRAS market, Alcatel has sewn up the Ethernet edge market (not that Neptune was well positioned here - no cost effective Ethernet, no 10G Ethernet and no resiliency) and the much touted Multiservice Edge market had moved on.

The Neptune team is being cast aside. A favored few have been "provided for", the rest have to take their chances in the highly competitive internal Nortel job market.

And after all this, Scott McFeely answered the question on why he was still there with "I met my numbers"....ah, these must have been Nortel numbers and we all know how reliable Nortel numbers are!

It would be a good thing for the team to see that failure does have consequence and to get a new leader who will display less of the McFeely arrogance and who can inspire a once-great team to future greatness.
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