Friday, January 16, 2009

Major customers choose to stick with bankrupt Nortel - for now...

UPDATE - Nortel Bankruptcy

[source bloomberg.com ] Nortel Networks Corp. customers said they will stick with the bankrupt phone-equipment maker for now, although analysts say competitors may pick up some business over the long term.Nortel's Chief Executive Officer Mike Zafirovski contacted customers yesterday to reassure them that North America ’s biggest maker of phone equipment is operating as usual. The largest customers in North America - Verizon, Sprint and BCE (Bell Canada Enterprises) said they will maintain ties with North America's largest telecom equipment manufacturer in the near term. [end of excerpt] Digg it here!

It always surprised me, several years back when Nortel stock first plummeted into the basement, how many customer, especially customers considering purchasing new systems, were willing to take the bet that Nortel would survive. I was a director of sales for Meteortel in Canada, largest dealer for one of Nortel's major competitor's - NEC. The loyalty of customers, especially those who were also Bell network customers, was almost unassailable. Given that major corporate telecom system purchases are long term infrastructure investments - realistically 10 years plus, our marketing strategy at the time stressed the impact of market uncertainty and future support issues. We had relative success, and were able to point out that although Nortel was the in the top 10 worldwide in Telecom (as was NEC), the breadth of NEC's offerings were backed by top ten standing in all three of Telecom, Computing and Semiconductors. Network and IP based products were also strong enough to stand up well against the Cisco VoIP trend (NEC manufactured several CISCO switches).

We once were in a competitive bid situation with our NEC offering facing off against Nortel and AT&T, when the customer's CEO claimed he would rather go with a company like Nortel or AT&T with a well established history in telecom rather than Japanese upstart. When I could reply that the history actually started a century ago with Western Telephone and Telegraph, which split into American Telephone and Telegraph (AT&T), Northern Telecom (Nortel) and Nippondenso Electric Company (NEC), that was critical in winning the business. Although I'm not in the telecom industry any more, having opted for non-profit work in poverty reduction, I can't help wondering how the bankruptcy of a major company such as Nortel will have on the Canadian economic scene - especially Canadian manufacturing and design / development operations. Check back to the blog for more updates.

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