Open source lessons in the Nortel bankruptcy

Open source lessons in the Nortel bankruptcy

Summary: Patents and corporate relationships are no longer enough in the telecom equipment space. For American companies to stage a comeback they will need high quality, low prices, and new customers here in the U.S.


Huawei logoThere are important lessons for open source in the Nortel bankruptcy, some good and some bad.

First, phone companies are liars. That's a good fact to know.

After winning tens of billions in subsidies during the decade, supposedly to extend broadband, AT&T and Verizon have instead played Monopoly on the field and destroyed their suppliers.

Nortel is not alone in being in the dumps. Alcatel, which bought the Bells' old Lucent arm in 2006 for $11 billion, is now trading under the financial Mendoza line ($2/share) and may yet become the French word for GM -- or Chrysler.

But there is another possible culprit, and in this lesson open source may be tarred as the villain.

That culprit is Huawei.

Huawei has used open standards and Chinese wages to become the dominant telecom player of our time.

While it has to fend off accusations of espionage and ties to the Chinese government, and while the big American networks remain leery of it, its gear has become first choice in the rest of the world.

Huawei is continuing to move ahead wherever open source lets it, developing an Android phone for instance. It is even sneaking up on Cisco.

Patents and corporate relationships are no longer enough in the telecom equipment space. For American companies to stage a comeback they will need high quality, low prices, and new customers here in the U.S.

It is not inevitable that open source will benefit the Chinese over the rest of us, but we need to change how we play and adapt.

Topics: Open Source, Networking, Telcos

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  • what a NON news

    Please: if you have nothing to say then dont say anything. Dont just post a couple of links and fill the rest of it with fluff and padding !!!.

    whats happening to ZD these days, does anyone vett these "stories".

    comeing here was a waiste of time, you owe me 5 minutes. (dont bother i would only waste it on toys) :)
    • NON news

      I sense that you don't appreciate the import of companies like Nortel and others in that industry. A short bit of research on Nortel might be quite an eye opener for you.
      Or maybe it's just sour grapes, I don't know. You're certainly welcome to your own opinions. I just wanted to say I disagreed.
  • Great Story

    AT&T is the devil incarnate.
  • RE: Open source lessons in the Nortel bankruptcy

    Unfortunately Nortel had ignored the lessons learned by Hauwei and companies like Google, Oracle, IBM and others who clearly understood the great advantages and benefits of employing superior "Open Source" technologies as critical tools in their portfolios, particularly in Networking/communications.

    Instead, Nortel chose to become a "puppet" of Microsoft by
    deploying their products "only" - in an industry that is almost entirely based on Open Standards" - for which most of the better solutions are based on Open Source. Microsoft is not a
    significant force in this arena.

    They deserve no special consideration for poor judgment.
    • Open Source Lessons

      I have to agree with wanderson. Nortel and several others were built on governemnt funds, not their own expertise, and when that support was pulled, money became tighter, financial reports became real again, and the truth of their many mistakes became clearer to many. But, they were leaders for a long time as long as they had the support. A few decades ago, Canada was THE place to start a new company, especially if you know how to wrangle an MP or two. They tried hard to consolidate and downsize, but it was just too late and their sins became public.
  • RE: Open source lessons in the Nortel bankruptcy

    As someone rather close to the story (15-yr ex-Nortel employee), there is also a business lesson.

    When the Sales/Marketing teams discover that the
    route to fame-&-fortune is in order BOOKING - not
    actually delivering product - run, RUN away.

    In order to book more orders than 'the other guy' (AT&T, Ericsson, etc), Nortel started to offer vendor-
    financing. So AT&T responded with their own financing,
    and so on ... Even during the heady days of dot-com optimism, someone should have asked the hard questions, because even though booking 10 orders is better than 5, the long-term implications must be recognized.
    In addition, Nortel has had to spend the last 5 years re-stating their books to deal with the Enron-like issue of reporting their (bloated) order-booking sheets as current revenue. I think it is fair to say
    that this was a huge distraction, one which Hauwei has exploited (albeit with help from the Chinese govt)
  • Nortel, nostalgia and reality

    ONe thing blatantly missing from the article is that Nortel is a Canadian company, headquartered in Ottawa, Ontarion, Canada. As an R&D mgr/director for one of their most serious competitors and meeting many Nortel employees while travelling, I can tell you that they and us (unnamed on purpose) did in fact see the writing on wall well over a decade ago. Our main headquarters were right down the road from theirs, so it was hard to not know anything about each other.
    Both companies (and Alcatel though less so) had fantastic, forward-thinking people in the middle and upper middle-management teams but their warnings were ignored, their ideas spurned, and they in general considered nothing but cowboys. They were achieved to accomplish goals as long as they stuck to "traditional" goals and weren't outside the box.
    These companies employed a LOT of people worldwide, myself included, so especially in Ottawa their problems were almost like a GM in Detroit. I never wish people out of jobs in any way, but in a way it does my heart good to see me, since I consider myself one of the spurned, to be shown to have been right. I'm not saying I/we had the RIGHT answer for perpetual success, but we were certainly on the right track. A little more forward thinking, and who knows?
    I'm disabled for health reasons now, but I still follow the industry and still find it interesting. Nostalgia is usually good though; until reality hits.