Nortel Buys DiamondWare

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Nortel Buys DiamondWare

For over six years I have been espousing the virtues of 3D, stereo voice conversations with articles  and ITEXPO demonstrations mostly focusing on DiamondWare and the company's patented 3D technology which allows you to have a conference calls with others and place them on the left right, front or rear.

Until you have heard a conference call in 3D stereo, you have not heard a conference call.

In addition, the technology allows the addition of overtones like adding a metallic sound to a speaker or group of speakers on a conference call. This function could be useful if you are looking to find a way to discern what group a person belongs to -- the Los Angeles office for example.

You may recall that on May 15th of this year, I suggested Nortel would even buy DiamondWare. Well today is that day as Nortel did just that... They purchased the company and further explained how they have a portion of their R&D budget devoted to making VC-like investments but of course with a potentially different exit strategy.

Nortel believes the future of communications is likely going to be avatar-based and even if they are partially right -- let's say 5% of all calls, this could be a huge market.

A Nortel Avatar Demo of their web.alive business communications platform:


Nortel is further betting that the technology advantage they have as a result of this acquisition will help insulate them against others in the market who compete. That would be Avaya, Cisco and even to a lesser degree (at the moment) Microsoft. You see, I personally believe that 3D, stereo communications provides such a rich immersive experience that once you have tried it, you will have trouble going back to traditional telephony.

This move is the second acquisition in a few weeks for Nortel as they just picked up Pingtel as well. For the Canadian-based company these moves are bold as Nortel seems to be gaining momentum in the enterprise. Many of us are aware that most acquisitions fail and Nortel's past acquisitions have not seen success above industry averages.

What the company has done these past weeks though is buy easily digestible companies which are relatively cheap. These companies are M&A training wheels and if the company can get better at acquiring, it can present a more formidable resistance to the Cisco onslaught. Over the years, I have heard more than one story of how Cisco has acquired Nortel partners and damaged Nortel in the process.

In order for technology companies to compete effectively against Oracle and Cisco, they need to know how to acquire successfully. So for Nortel, the world is their oyster... They have the DiamondWare 3D technology and  are now a player in open source and have time to practice the M&A game.

How the company handles these two new companies will show me and others if they are able to successfully pull off more deals and become a bigger competitive threat to other industry players.

In the mean time, these moves should serve as a signal to competitors that Nortel seems to have gotten its mojo back and for customers, I suggest you join me in pushing Nortel to get DiamondWare technology into the company's entire product line ASAP.

See Also

Jon Arnold's take
Press Release


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