Like Ericsson, Nortel knows it needs a strong access infrastructure story if it is to be a significant player in the IPTV market, and will likely need to do more if it is to meet its own competitive criteria: CEO Mike Zafirovski is only interested in competing in markets where Nortel can be one of the top two players, or command a 20 percent market share.
Other than with Calix, Nortel hasn’t had much luck with its broadband access partnerships since it decided to abandon the DSL market. Its relationship with ECI Telecom Ltd. (ECIL) ended in tears, while a partnership with Chinese vendor Huawei Technologies Co. Ltd. broke down before it even got going.
Looking to Trim R&D Costs
The Globe and Mail had an article yesterday looking at Nortel’s R&D operations on its campus in Ottawa, which consists of 4,000 people and two Tim Horton’s coffee shops.
The story is based on an interview with CTO John Roese (check out his blog), who talks about how Nortel’s need to become better focused and more efficient when it comes to R&D, which means reducing costs.
It’s unclear, however, whether cost-reductions involve things such as more efficient procurement, or whether it means the number of R&D employees around the world will be reduced.
Nortel CEO Mike Zafirovski has talked about Nortel maintaining its R&D spending at about 15% of total revenue but the company has also talked about the company being focused and not wasting money on skunk-work projects. And as much as everyone likes to talk about Nortel’s heritage as an innovator, the reality is Nortel is developing and selling new and different projects through joint ventures and partnerships with companies such as IBM (NYSE:IBM), Microsoft (NASDAQ:MSFT) and LG (NYSE:LPL). This may mean internal R&D - while still important - can take on a different, more focused role on key technologies such as IP-TV and WiMax.