Nortel: Why Cisco should be worried

Nortel: Why Cisco should be worried

Nortel president and CEO talks business

Nortel's been quoted as sizing the WiMAX market at US$7.5 billion by 2010. Is the company sticking with that forecast and are you seeing a return on your increased investment in WiMAX?

We are already taking revenue. We are very excited about our announcement on a transaction with Chunghwa Telecom from Taiwan. Not a trial, but an actual order, which we'll be delivering in the first part of next year. As Sprint, Chunghwa Telecom or the established players demonstrate the power of WiMAX, I believe the upside is greater than the downside, with respect to the size of that market.

What can enterprises expect next year from your alliance with Microsoft?

Much stronger alignment, even on the existing products - [Microsoft's Live Communications Server] and our product. What they are going to be able to see is a very robust transition plan from whatever customers currently have to eventually unified communications solution. They'll see part of that in the latter part of 2007 and of course, that's going to become more prevalent in 2008 and beyond. Most significantly, this is opening doors for both of us.

Any plans to expand into the consumer market?

Not yet. We need to walk before we can run and we have quite a big opportunity in the enterprise - large, medium and [small and midsize businesses].

How would you sum up Nortel's progress since you joined?

We're absolutely thrilled with the reception from customers and employees as well as with our prioritization on bolstering the processes, putting in Six Sigma [principles] to address our quality standards and reinstituting [time-to-market] - a sophisticated product introduction process that the old Nortel used to have to really pump products. I give ourselves an A-plus on that.

I wish we had made more progress on our gross margins [Nortel was shooting for 40 percent-plus but came in at 38 percent in the third quarter, down from 39 percent the year before]. We've been able to become more competitive but industry pricing has also been quite challenging, particularly on the carrier side. The good news is we have stabilized our gross margin declines.

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