Businesses might not want to buy enterprise network gear from bankrupt Nortel, but how about from Bay Networks?
The man running Nortel’s Enterprise Data Solutions division wants to resurrect the Bay Networks name to underscore the pedigree of its corporate infrastructure products.
“The more independently I can run this business and take it back to its roots and make Bay Networks exist again, the more effective and focused we are going to be,” says John McHugh, vice president and general manager of Enterprise Data Solutions. “I would like Nortel to reincarnate Bay Networks.”
The name change is legally possible because Nortel still owns the rights to the Bay Networks trademark by virtue of buying the company in 1998 for $9.1 billion, he says.
Whether that happens relies on the fate of the enterprise division, which could be sold to an existing business or spun off independently. Then it would be up to the new ownership to decide about the name change, McHugh says. “It’s edgy, it’s fraught with some risk, but customers say, I’ve been buying your products since you were Bay Networks,” he says. “If there is a transaction, the future owners should seriously consider that.”
Integration of Bay into Nortel “was not a success,” he says, but either way, he says the most important thing is to highlight the core enterprise gear in its portfolio. Part of the problem Nortel’s Enterprise faces is that its identity has been obscured by the larger Nortel business push into unified communications.
“The parent company doesn’t understand how important data networking equipment is from a customer perspective,” says “There was a higher level strategic goal that we were peripheral participants in. We were a strategic afterthought.”
But if one rumored deal comes through, Avaya might be the buyer, which would create the same problem McHugh sees with Nortel. Avaya’s main message is unified communications, which would subordinate the infrastructure once again. Without having to compete with the marketing din created by other products the enterprise equipment could be better appreciated, he says. “ You have to have an unambiguous statement of intent,” he says.
“Nortel has got to stand toe-to-toe with the networking companies.” He says he is referring to the likes of Cisco and HP, where McHugh worked on the ProCurve line for 10 years. He says that Nortel has a large installed base that is loyal, and he would like to build on that, pushing the enterprise unit’s revenues from $500 million to more than $1 billion in two years.
“Let’s beat Cisco head-to-head in the wiring closet. This is a big installed base with intense loyalty from customers,” he said.
Two factors are freezing Nortel enterprise customers from extending their business with the company, the Chapter 11 bankruptcy and the bad economy that has them delaying spending decisions. “A fair number of my normal customers have the economy or questions about the direction of our business that they’re waiting on.”
Meanwhile he is hoping customers will hang on until the Nortel bankruptcy is completed, which seems likely to result in its various business units being spit up and sold separately to the highest bidder.
“This is kind of like chemotherapy; this is the cure, not the disease,” McHugh says. “It’s not going to be pleasant, and it’s nothing to happen in a way that anybody’s going to say, I’d like to go through that again.” But he hopes the bankruptcy this year will leave his unit focused and agile.
He says Nortel enterprise gear could stand out from competitors because of its custom chips that reduce idle-state power consumption and that it will take competitors three years to develop. It also stands out because of its ability to run parallel trunks with sub-second failover.
The company has plans to upgrade its switches and routers with provider link state bridging (PLSB) Ethernet-forwarding technology from its carrier equipment, McHugh says.