The death and life of Nortel

In the fall of 2001, when I was writing for Telephony, we ran a cover that proclaimed "The End of Big." It was a reference to what we predicted would be the end of market dominance by the big network equipment vendors, who were then carrying out job cuts numbering in the thousands, confronting many smaller, specialized competitors, and realizing their own inability to lead the charge into new market segments.

The big vendors we spoke of at the time included Lucent Technologies, Nortel Networks, Alcatel and Siemens, among others. But, the company represented on the cover of that issue (Oct. 8, 2001) was Nortel, a firm that at the time was shuffling out an old core of executives and had just announced 20,000 job cuts. Nortel would go on to have many more problems and financial struggles in the years ahead, but strangely, it was the one company among the giants of the period that kept its identity and remained independent. Alcatel acquired Lucent; Siemens became fractured in its own ways, with some of its telecom assets later helping to form the foundation for Nokia Siemens Networks. Somewhat marginalized players like Ericsson and Cisco Systems emerged as new giants. Huawei Technologies rocketed to the forefront.

Yet, Nortel was always Nortel. The company did some some things differently, of course, including forming enterprise partnerships that led it in new directions. There were glimpses of promise, if never a return to form as a true giant of the network equipment sector. Now, Nortel is in Chapter 11 bankruptcy protection, and though the company has expressed a desire to emerge newly vital and newly focused, there have been recent reports suggesting that NSN and other companies are interested in buying various portions of Nortel. If that were to happen, it's not exactly clear what might be left of the company to exit Chapter 11.

If Nortel does sell off various chunks of itself, but still manages to survive as a company in some way, it likely would be a much smaller, more specialized firm, not the Nortel of the last decade and certainly not the Northern Telecom we knew back in the 1990s and before then. That company was fed by a constant stream of engineering talent from schools in Ottawa and Toronto. It was a North American giant, challenging the continent's other colossus, Lucent (and before that AT&T Network Systems) at every turn.

Nortel may yet emerge from Chapter 11 looking more like its old self than these recent reports suggest, but if it doesn't, we shouldn't mourn the loss of another old-school telecom firm. We also shouldn't mourn "the end of big" again, because we should know by now that the biggest telecom vendors still stand at the front of the carrier gates, whispering in the ears of the gatekeepers to let their less-celebrated friends in now and then. If anything, the big vendors are more influential than ever. As the New York Times noted in a recent story, NSN and Ericsson are the world's two biggest mobile network operators now by virtue of their managed network agreements with various mobile carriers.

If Nortel is lost, the loss will be nothing new for many people who have been affiliated with the company over the years. Nortel is one-third the size it was in its heyday, and for the people who worked there-and who would have liked to work there-the company's death would come only as a final confirmation. If all else is lost, that talent pool should be the thing about Nortel that we remember most. It is people who make companies, and the new vendor elite who take over Nortel businesses and move onto Nortel's turf should remember that as well.

-Dan [1]

For more:
- The Wall Street Journal has this report [2]
- The New York Times reports [3] on the successes of Ericsson and NSN
- Here's the story [4] on "The End of Big" at Telephony