More to the Story about Nortel and Genband

Implications: 1.Nortel has not kept up sufficient development on its soft switches or on its media gateways. 2.The whole root of the deal with Genband is not really about “target[ing] rural carriers.” 3.By going to the Genband G6, Nortel eliminates one negative aspect of its total solution.

Analysis:  

Nortel appears to be having all kinds of technological trouble with its media gateway. In addition, its CS2K is no longer the platform to beat – it just seems to have run out of steam. Apparently, there have been all kinds of software issues and outage problems with the soft switch. Nortel just did not focus enough of its attention on a key area of strength – public network switching. It left a lot of its talented people in this area go – those who were probably making a lot of noise about fixing these difficulties – while keeping employees that tended to keep their mouths shut – in effect, promoting Nortel moving in directions outside of its core competency.

It seems likely that Nortel basing its media gateway portfolio on sort of a retooled Passport box was a big mistake. The vendor should have developed something specific for that platform.

While Genband’s soft switches are nothing to right home about, its media gateway is

excellent. Alcatel-Lucent currently buys the bulk of the Genband gateways and the former owns a chunk of the latter. Although there are no indications that Alcatel-Lucent is going to make a move to acquire Genband, obviously it is not out of the question – and it would clearly have a detrimental effect on Nortel.

In general, Nortel still has time to get its act together again to once again become an effective player in the CO packet space. A major shift in the marketplace for access wireline applications has not taken place, yet.