Mobile Satellite will test Nortel’s Wi-Max technology in North America while Wind Telecom will use it in the Dominican Republic to deliver high-speed wireless access. “It’s a big leap of faith,” Jeremy Duke, chief executive officer of Synergy Research Group told Bloomberg. “If it pays off, it will pay off big. It’s such a nascent market.”
As much as Nortel is talking the talk about Wi-Max being a strategic priority, the big question - and one being asked by a growing number of people - is whether Nortel has a legitimate shot of becoming one of the leading Wi-Max suppliers. This issue has gained more momentum since Nortel was not included with Sprint’s (NYSE:S) multi-billion Wi-Max contract recently.
Network World’s Jim Duffy has an interesting story in which he quotes CIBC analyst Itai Kidron, who said Nortel either needs to become more aggressive and make some Wi-Max-related acquisitions or it needs to get out of the business and focus on areas where there is a better ROI opportunity.
“Nortel needs to still focus its strategy and narrow its business activities to a smaller number of opportunities which should be pursued more aggressively,” Kidron in a recent research report.
Another question is what happens to Nortel’s wireless business if it doesn’t gain a lot of traction with Wi-Max. The company got out of the UMTS business last year, and its CDMA business is a distant second to Alcatel-Lucent (NYSE:ALU), while its GSM business is a relatively minor player.
While CEO Mike Zafirovski has played it safe so far with acquisitions - not a bad strategy when you’re trying to restructure a $10-billion company - the time may come for him to make a bold move to get Nortel back in the game.