Nortel’s been talking up its unified communications partnership with Microsoft in recent months – part of CEO Mike Zafirovski’s strategic partnership plan. Avaya, however, claims it was Microsoft’s first choice but turned down the opportunity because it didn’t want to license its content control technology to Microsoft. “They came to us to offer that deal and we turned them down, and now they’re coming back to try again,” said Karyn Mashima, senior VP of strategy and technology, told Computer Business Review. That said, it sounds like there’s some sour grapes between Avaya and Microsoft as Mashima adds that Microsoft was asking to license Avaya’s “crown jewels”, and that Microsoft has realized its alliance with Nortel isn’t strong enough to take on Avaya or Cisco. “It’s fine for the Nortel installed base, but Microsoft is getting asked a lot by its customers about the relationship with us.”
Archive for the ‘Contract Wins’ Category
In the wake of Sprint selecting Nokia rather than Nortel as the third supplier for its $2.5-billion to $3-billion WiMax contract, it’s interesting read a research report issued last week by TD Securities analyst Chris Umiastowski (before Sprint officially unveiled Nokia as its choice). Umiastowski said Nokia’s selection would be a “disappointment” for Nortel because Nortel has been promoting WiMax as a strategic priority and enjoyed a long relationship with Sprint as one of the carrier’s key CDMA suppliers.
“We would argue there are few WiMax customers where Nortel would be better positioned than with Sprint,” Umiastowski said. “If Sprint were to select Nokia as an infrastructure supplier, it does not necessarily man that Nortel would not be sued. However, it would probably mean that any involvement by Nortel in the project would be a lot less relevant than it could be. In our view, it would be a huge disappointment for Nortel if they do not win at some part of Sprint’s WiMax build”.
Umiastowski suggests Nortel may have been left out of the mix because unlike Samsung, Motorola and Nokia, Nortel does not make mobile handsets. “We are starting to wonder if we could be seeing a shift in how WiMax infrastructure equipment is selected, where the vendor must also supply the carrier with WiMax handsets,” he said.
“If that were the case, it could pose a big challenge for the likes of Nortel and Alcatel-Lucent and could possibly relegate them to Tier 2 status suppliers”. (Editor’s note: Couldn’t Nortel and Alcatel-Lucent simply sub-contract the WiMax handsets as part of a contract proposal? Do they really have to make WiMax handsets?)
As the Wall St. Journal reported last week, Nortel has not been selected to be part of Sprint Nextel’s suppliers for its $1.5-billion to $2-billion WiMax project. Instead, Sprint selected Nokia. In a report, Genuity Capital analyst David Hodgson said “We believe this is a significant blow to Nortel, which had high hopes (both internally and externally) of being the third supplier”. According to the Ottawa Citizen, Hodgson said Nortel may have lost out on the Sprint deal because it wasn’t willing to share the risk financially as Nokia, Motorola and Samsung.
According to the Wall St. Journal (hat tip to Seeking Alpha), Sprint has rounded out its WiMax suppliers by selecting Nokia ahead of Alcatel-Lucent and Nortel. Nokia will join Motorola and Samsung Electronics to supply technology for Sprint’s $3-billion WiMax network over the next two years. This can’t be good news for Nortel, which has pinned a lot of its future growth on WiMax. That said, Sprint is just a single contract so it’s not like Nortel’s WiMax dreams have evaporated (much like Nortel now appears to be back in BT’s good books after missing out on the 21CN contract). But it would have been a solid signal to the market if Sprint had tapped Nortel.
It’s interesting to see the pragmatic – if somewhat unenthusiastic reaction – among analyst to Nortel’s $2-billion deal with Verizon Wireless, which was announced yesterday. It’s almost like no one is willing to jump back on the bandwagon even though Nortel appears to have gained some momentum with a key customer. A good example is Sanford C. Bernstein analyst Paul Sagawa, who told the Globe & Mail that Nortel will be getting about $400-million of business year from Verizon, which is close to what it’s already been selling to the largest wireless carrier in the U.S. “Nortel’s got some 20-per-cent share of the Verizon network, and they’re going to [continue to] get that unless they do something really egregious to lose it,” he said. “Basically it’s an expansion and upgrade to an installed base that’s already there.” Nortel shares climbed 3.1%, or 75 cents, yesterday to $24.50 in New York.
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Not sure quite to make of the news that Nortel has won a five-year, $2-billion contract to provide equipment and services to Verizon Wireless. From previous experiences dealing with Nortel and large contracts, I’m reluctant to trumpet the fact Nortel has won a $2-billion contract because who really knows if $2-billion of business will actually materialize over the next five years given technology changes, strategy changes and consumer behavior changes. Nevertheless, there has to be some good news from the fact Verizon will be using additional CDMA2000 radio base stations, switching, IP platforms, optical networking solutions and related equipment from Nortel.
“This contract confirms Nortel’s leadership in supplying innovative CDMA mobile broadband technologies and driving advanced communication services,” said Nortel’s Richard Lowe. “It’s our long term partners that know us best, so we’re particularly proud when an industry leader like Verizon Wireless asks us to be part of their team for another five years.” Of course, it’s fine to be the leader in CDMA other than the fact CDMA’s on the decline while GSM is on the rise but that’s another story for another day.
In mid-day trading, Nortel is up 58 cents to $24.33. A Reuter story on the deal can be found here.
More thoughts: I knew there was a reason this story sounded eerily familar. In January 2004, Nortel signed a five-year deal estimated to be worth $5-billion with Verizon Communications to migrate the carrier’s local and long-distance networks to Internet-based technology from older circuit-based systems. The agreement made Nortel the exclusive provider of Verizon’s local and long-distance class four and class five switches, and Voice-over-Internet Protocol and multi-media services equipment over the next 18 months. I’d be very surprised if Nortel will collect $5-billion from this agreement.
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Eastman Kodak has extended its U.S. voice network management deal for another three years with Nortel. This involves Kodak’s U.S. network of PBXs and telephone services through 2008, as well as an upgrade of the existing Meridian switch to an IP-enabled Communication Server 2100.
After being unceremoniously excluded from BT’s $19-billion next-generation network project a couple of years ago, it looks like Nortel could be getting back in BT’s good books. The two companies have signed a new, three-year deal with will see Nortel help BT provide its business customers with VoIP, multi-media, instant messaging and mobile communications services. “BT’s customers are turning to convergence to improve the efficiency and flexibility of their businesses,” said Andy Green, BT Global Services’ CEO. “To support them we must ensure that we have the right partners in place with leading-edge portfolios, the highest levels of commitment and a shared vision.”
Perhaps what’s most intriguing about the press release it is it suggests “the signing of the new agreement between BT and Nortel is part of an extensive review by BT of its vendor partnership strategy.” I wonder if this statement just involves mobile, VoIP, multi-media and instant messaging technology or whether it suggests a broader review.
For more on this news, check out TMCnet.
If this whole Wi-Max strategy doesn’t work out, Nortel may have another wireless business poised to propel growth: hockey arenas. Nortel has signed a deal with Scotiabank place – the home of the Ottawa Senators – to provide a “state of the art” wireless network throughout the building. Earlier this year, Nortel signed a wireless deal with the Bell Centre where the Montreal Canadiens play. “Nortel is pleased to continue its long-standing partnership with the Ottawa Senators. In addition to rebuilding the Senators’ communications network, Nortel will build a customer visit centre in one of the Scotiabank Place suites,” said John Roese, Nortel’s chief technology officer. “We’ll be able to bring customers into the suite to watch some exciting hockey and, at the same time, see the latest technology in action.”
As Nortel pursues a strategy to gain 20% of the emerging Wi-Max market, it has won a contract to provide equipment to Taiwan’s Chunghwa Telecom Co.’s WiMax network. Terms of the deal were not disclosed. Obviously, any contract win is a big deal but the question that analysts and investors need to ask is whether Nortel’s 20% goal is realistic given there are few markets now in which is has that much market share. Sure, Nortel is a strong wireless player but so are Ericsson, Alcatel/Lucent, Nokia, and Motorola so the competition for Wi-Max contracts is going to be fierce.
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The boom in sales that telecom equipment makers are expecting from doing business in China may not materialize, according to the Wall St. Journal. With $10-billion to $30-million of 3G wireless sales poised to happen over the next four to five years, the business may go to Chinese suppliers such as ZTE and Huawei rather than Nortel, Lucent, Motorola or Ericsson. Here’s the story:
Bad news may be in store for Western telecommunications-equipment makers hoping to cash in on China’s expected $10 billion to $30 billion investment in new third-generation wireless networks over the next four to five years.
Manufacturers, including Motorola Inc., Lucent Technologies Inc., Nortel Networks Corp. and Sweden-based Telefon AB L.M. Ericsson, that have long dominated the Chinese market for wireless network equipment are faced with the possibility of losing sizable market share.
China is expected to try to give its own equipment makers a boost by launching its third-generation, or 3G, networks with its own technology standard, called TD-SCDMA, along with other standards. In the past 10 years, Chinese companies Huawei Technologies Co. and ZTE Corp. have been expanding aggressively in the global market and are ready to compete for 3G equipment contracts at home.
It took a few days but the Globe & Mail has finally picked up on Nortel’s $20-million contract to build a fiber-optic network in Iraq.
Ericsson and Nokia have won a contract to supply equipment for T-Mobile’s 3G network in the U.S. The contract comes on the heels of announcement by parent, Deutsche Telekom, that it would spend$2.64 billion on a U.S. 3G network. According to an RBC Capital Markets report (an excerpt was posted by GigaOm), “Ericsson may be gaining share from Alcatel/Lucent and Nokia/Siemens, both of whom are mired in major integration efforts. . . Nortel is losing share largely in part due to it abandoned UMTS plans.” A Light Reading story can be found here.
Nortel is getting involved in the reconstruction of Iraq’s infrastructure with a $20-million contract to build a new, 5,000-kilometer fibre-optic network for Iraq Telecommunications & Post Corp. The network, which will deliver data, video and multi-media services, will be linked an another network built by Nortel in 2004 that runs between Basra and Baghdad. "This national project is vitally important to the many telecommunications projects underway that will help rebuild the capabilities of the Iraqi society and economy," said Mohamed Allawi, Iraq’s minister of communications, in a press release. Tags: Nortel, Iraq, network