Canadian networking company Nortel Networks Inc has spent an undisclosed amount to acquire a small stake in DeskTalk Systems Inc, the Nashua, New Hampshire-based developer of proactive performance reporting software for telcos and corporate networks. The logic behind the acquisition, which was actually carried out in December but is only now being announced, is to enable Nortel to integrate the key elements of DeskTalk’s flagship product, Trend, into Nortel’s own Optivity element management software.
DeskTalk president and CEO Michael McCoy said that, from Nortel’s point of view, this will enhance Optivity with performance analysis and reporting capabilities. For DeskTalk, he went on, the venture will seed a market segment it is not currently in, i.e. the entry level, as well as spreading awareness of the DeskTalk name. The hope is that, as Nortel’s customers need to scale up, they will move from the entry-level product it markets [provisionally known as Optivity Trend] to the Trend package per se, explained DeskTalk’s director of product marketing, Debra Curtis.
The privately-held DeskTalk disclosed no details of the acquisition, though sources said Nortel paid a double-digit amount for a stake of just under 10% of the company. DeskTalk has a 15% share of the market for proactive performance reporting software, ranking it second behind Marlboro, Massachusetts-based Concord Communications Inc, with 45%. McCoy argues that, after its successful IPO in 1997, Concord has been more aggressive in marketing both its product and itself. We’re just starting on the same road, he went on, explaining that the Nortel alliance is part of that process. He added that a flotation by the end of this year is also possible.
The backdrop to Nortel’s entry into DeskTalk’s capital is the growing demand upon networking hardware manufacturers to supply software enabling operators to better examine and understand the flow of traffic in order to honor service level agreements. In December Nortel’s arch rival Cisco Systems Inc announced collaboration with Concord for the development of similar offerings.
