By Stephen Phillips
Nortel Networks Corp is set to formally unveil a 1000-strong dedicated business unit to back the launch of an integrated suite of software applications, middleware and network infrastructure tailored for applications service providers, ComputerWire has learned.
The network equipment giant has quietly assembled a cadre of product management, marketing and development-support personnel within the last six months to staff the new division according to a high-level source close to the company. Nortel will formally christen the group over the next few weeks, naming as its leader, Richard Caruso, vice president and general manager of its IP Network Applications division, said the source.
Nortel believes that applications will drive network demand. [Nortel] need[s] to get into the solutions business to leverage [its] optical network leadership into the datacenter and applications space, said the source. They said Nortel would buy software companies, develop partnerships and work with OEMs to develop applications that thrive on high-bandwidth. In October, Nortel surprised some observers by announcing a $2.1bn stock- based deal to acquire customer relationship management software vendor, Clarify Inc. At the time, the company gave only sketchy details on what it would do with Clarify’s software, although Bill Connor, vice president of Nortel’s enterprise solutions business, said it planned to offer bundles or packages of Clarify’s software on Nortel hardware.
The senior source described the ASP move as a major departure from Nortel’s traditional business of selling plumbing. They added that Richard Caruso, recently hired away from IBM Corp where he ran a telephony solutions unit in New Jersey, had been hand picked to head the unit as someone not afraid to put together end-to-end solutions, from applications to professional services. The source said that Nortel had heady profit expectations of the new product suite and business unit, and had already projected possible future revenue streams. Nortel is going in head-first, added the source.
ComputerWire understands that the new division is composed half- and-half of new recruits and redeployments from other units. To date it has been divided into six informal work categories, covering: hosted applications; infrastructure; datacenter; communications applications; and directory and professional services. Staff are distributed across Nortel facilities in Richardson, Texas; Raleigh-Durham, North Carolina; Boston, Massachusetts; and its headquarters in Ottawa, Canada. The company is said to be currently checking existing trademarks before designating a formal name for the unit.
The source spoke to ComputerWire after Richard Caruso had told a packed public forum of application service providers at the ASP Summit in San Francisco yesterday that Nortel would team with partners to launch a suite of pre-integrated software applications. Caruso said the offering would also span Nortel’s middleware and networking infrastructure equipment. He said Nortel would offer call center; messaging; e-commerce and customer relationship management software modules. The source added that Nortel would publicly announce agreements with four software and middleware providers to underpin the offering. ComputerWire was unable to obtain further details on the software and hardware as this article went to press, although the source said some of the applications were already available. Nortel is offering an integrated suite of applications in response to demand from ASPs, the source said.
But Nortel’s senior communications manager, global communications, David Chamberlin, told ComputerWire that the company had struck no deals with other companies toward co- developing on solutions for ASPs. However, another Nortel spokesperson said that there would be a definite announcement, but that it would not be made next week as previously planned. Meanwhile, Chamberlin declined to deny the revelations about the new business unit. We don’t comment on rumor or speculation, he said.
The senior source said the imminent launch would be just the start of Nortel’s ASP product range, which will evolve to address developing market appetite for remotely-hosted applications. Caruso said yesterday that Nortel had commissioned extensive research into the market opportunity represented by ASPs, and the applications they sought to meet market demand. Caruso said demand for ASPs products would be driven by small and medium- sized businesses, which he estimated numbered at least 13 million in North America alone. So-called SMBs, without the cash heft of larger corporates to fund in-house systems, are seen as the ideal customers for ASPs. Under the ASP model remotely-hosted applications are rented or paid for per use. Caruso cited a poll of 79 SMBs, who had outsourced applications to ASPs or were about to. The survey conducted by Zona Research two months ago found that the most sought-after applications from ASPS were e- commerce; e-mail; CRM and finance modules. Demand for supply chain management and ERP software is currently sluggish, according to the research, but expected to grow by 2002.
