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Enterprise chief says Nortel customers hit ‘pause button’

Nortel enterprise customers have pressed “a pause button” in purchasing gear from the company, the chief of Nortel’s Enterprise Solutions group acknowledged this week.

Customers are waiting to see what Nortel will look like when its restructuring plan due July 30 is revealed, said Joel Hackney, president of Nortel Enterprise Solutions, at this week's Interop conference. They are also waiting on their own budgets to open up so they can resume spending, he said.

“We’re seeing a pause button in a large portion of our customer base,” Hackney said. “It’s caused by the economy and Nortel's position.”

Hackney says Nortel customers are not fleeing the company while it reorganizes under Chapter 11 bankruptcy protection.

“The sales cycles are lengthening but the loss rate is not increasing,” he said.

Nortel said it's still in the enterprise switching game. This week it rolled out a core data center switch, the VSP 9000, as a proof point that it continues to develop product even though its future as a company hangs in the balance.

Hackney also said Microsoft has not abandoned the company and the Innovative Communications Alliance they shared for unified communications. Microsoft this week announced it has entered into a similar arrangement with HP, which the companies funded with $180 million over four years and cross-licensing of patents.

“The benefits to both companies (Nortel and Microsoft) have met our expectations,” Hackney said of the four-year ICA alliance, which ends next year. “The HP elements have some common elements between the Nortel/Microsoft alliance. But they also have some pretty specific differentiation.”

HP has IT infrastructure – PCs, servers, data center – while Nortel specializes in real-time communications, Hackney says.

“Microsoft feels they have enough capacity to have two or three key alliances like this,” he says.

Indeed, Nortel is aligning its enterprise business on being a focused and unencumbered provider of enterprise infrastructure specifically for unified communications deployments.

“We can be a very relevant and profitable business without having to be a $10 billion business,” Hackney says, adding that Nortel is looking to now address these opportunities with the mentality of a start-up – albeit one with a significant installed base. He claims Nortel can be a “pure play” in the enterprise UC infrastructure space while rivals like Cisco are stretched across virtually every market; and HP and others are fixated on the data center.

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