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Better M&A, management and marketing skills always win the war

As Ron Gruia pointed out this morning, the Nortel fire sale continues and a once-great company with a market cap of $250 billion is effectively being sold off at bargain-basement prices. In fact NSN picked up the ailing Canadian company's CDMA and LTE business for about one times revenue or $650 million. At this rate the entire company will be sold off for a total of $2 billion. The silver lining in this dark news is that customers will be able to have a solid company behind them in NSN and thankfully at least 2,500 employees working in Canada, the U.S., Mexico and China will be able to maintain their jobs working for NSN.

As a show of support for the deal, EDC or Export Development Canada is throwing in $300 million toward an NSN credit facility - a full 10x more than the agency was willing to commit to Nortel!

For NSN the deal means a stronger North American presence and also they go from not having a CDMA business to becoming number two. They will have to work hard to maintain this business as Asian rivals are coming on strong. An additional benefit of the deal is a number of LTE patents, technology and expertise which will come in very handy as the world transitions to faster wireless broadband networks.

I have seen some surmise Nortel went down because of open source and the Internet and to some degree this is part of the problem. But perhaps the biggest problem at Nortel was failure to adjust to a market that moves faster than ever coupled with the inability to effectively integrate acquired companies. Some Nortel employees told me the company was too flexible with the companies they acquired and should have set tougher rules regarding integration.

The major take away from this ordeal is how a company with superior technology got beaten by other companies with inferior technology but better M&A, management and marketing skills. At the end of the day the products are important but as Nortel continues to show us, having great technology alone does not a long-term successful strategy make.

In 2001 when the PDA market was all the rage and smartphones didn't really exist, a company called Interactive Intelligence a leader in the contact center space saw an opportunity for a development platform called Mobilite (pronounced as if you are French) which would allow developers to develop once and have applications run on any mobile device.

The idea was genius and ahead of its time so Mobilite was shelved sometime later.

I couldn't help but think of this product as I spoke with Rhomobile Founder and CEO Adam Blum who was telling me about his company's open source mobile application framework Rhodes which lets you quickly build native mobile applications for all smartphone operating systems: iPhone, BlackBerry, Windows Mobile, Symbian and Android. Blum emphasizes that applications can take advantage of native GPS, PIM contacts and camera and that they are native, not just web applications optimized for each platform.

Another company in the space is PhoneGap and Blum explains that Rhodes focuses more on business applications while PhoneGap focuses more on consumer apps.

This graphic was chosen due to its looks and may or may not be related to the subject matter in this article -- depending on your perspective.

He went on to tell me Wikipedia rewrote their iPhone application using the Rhodes framework and used 20% of the code needed in Objective C and the resulting program also ran faster. He further went on to explain that while you may imagine his development environment is slanted heavily towards the iPhone, the reality is objective testers have shown applications run the same across all platforms.

Blum was Director of Engineering for Good Technology and explains he saw $200 million pushed into the company and as a result 200 engineers worked to get an email client on three smartphone operating systems. This lunacy (my chosen term, not his) made him decide to launch a company to stop the madness and his twelve-person company is looking to make mobile application writing more efficient.

In our conversation Blum explained that he believes it is virtually impossible to develop to more than two device operating systems beyond version 1.0 without some sort of cross-platform development application. He further explained that such an environment needs to be open-source in nature and as such his solution is completely open source.

As mentioned above there is a strong business focus here so new features are to added to the development environment with business developers in mind first.

Blum also told me his company is well-positioned in this economic environment as they are solving a pain point - one that has a high-degree of urgency. He concluded by saying, "What would you do without it?"

With that Blum and his 12-person company may have made some software development history by announcing RhoHub, perhaps the first development-as-a-service offering for mobile applications.

What are the benefits to developers? Well first of all you don't need to have a variety of development environments and disparate computers in your company in order to develop mobile applications for multiple devices. In addition, the company offers up a provisioning server and can even host the application and allow users to download the correct version based on device.

If you are developing mobile applications it is apparent you need to support the iPhone, Palm, RIM, Nokia, Android, Windows Mobile and Blum thinks Linux Mobile is going to be a contender as well soon. You obviously can't be an expert at all of these environments and you will obviously benefit from some sort of cross-platform development tool like the one his company sells.

But before you go out and trash your Mac and start developing your iPhone apps on the web, you should be aware that Apple's App Store seems to be rejecting a high number of applications which are being built on cross-platform development tools. This could have something to do with the major changes in the iPhone 3.0 OS coming soon but for now it is too soon to tell.

While it is obvious this sort of solution is necessary, we need to watch what companies like Apple and others do to existing customers of cross-platform tools before jumping in too quickly.

This entry from the company's blog may prove useful in your decision-making process.

The drive for more bandwidth does not slow - even in a global recession some reports show bandwidth needs increasing at rates higher than 100% per year on carrier and enterprise networks. The trend towards more collaborative applications, video, VoIP and cloud-based services are no doubt just a few factors in what seems to be just the beginning of a global bandwidth binge showing no sign of slowing.

Enter Expand a company focusing on application acceleration over WANs who is looking to help solve the branch office bandwidth drought. The company makes its living selling a variety of appliances which they say will increase ROI and stretch IT budgets further. These devices are optimized for datacenters, branch offices and regional offices.

The company counts Fidelity National Insurance, Piconol, Antarctica NZ, Targus, DISA and Evans Fruit Company as some of its customers and has partnered with Vision Solutions to provide more efficient disaster recovery services.

At Interop 2009 in Las Vegas, the company unveiled a new solution they hope will become widely deployed on global networks. Simply put they have unveiled a free Mobile Accelerator Client which gives some of the benefits of an appliance but at a much lower cost. Well actually it is free so you don't get much cheaper. The catch? There is always a catch right? Well not really - you just pay for maximal concurrent users.

How is the performance you wonder? The graph below was provided to me to give an indication. Freestyle means you are alone, Collective means you are sharing a virtual cache and Slipstream means you are utilizing an appliance.

In order to get an idea how the mobile client works you need to better understand Expand Networks and their approach to WAN optimization. They have developed a technology called HIVE which is a clever acronym which stands for Heterogeneous Intelligent Virtual Environment.

The H in Hive tells us that the solution works on various platforms. If you are hoping one of the platforms supported is Apple, keep waiting as XP, Vista and Windows 7 are the only ones on the list so far.

The I standsfor intelligent and of course the software is smart - butone could argue in fact that all software is smart. Except perhaps for applications that let you turn your mobile phone into a virtual beer.

The V standsfor virtual and in this case is actually a solid descriptive word - not just marketing as the mobile client uses p2p technology to enable a branch office with multiple clients to take advantage of a pooled virtual cache. So if Donny in HR downloads a 10 gigabyte video file which five other users need later in the week, you can all tap into the file from Donny's computer rather that all wasting network bandwidth by downloading the file again and again. And you thought Donny had nothing to offer.

I almost forgot - the E stands for environment meaning the software knows if it is in a branch office without a nearby appliance or in the home office where there is an appliance or alone by its lonesome. In each case it adapts and utilizes a byte and object level cache to maximize performance.

As you might imagine, the system knows how to allocate bandwidth according to your QoS policies - it is Intelligent after all.

I spent some time with company representatives David White, Efi Gatmor and Adam Davison as they told me about their product and shared the benefits of their HIVE technology for information technology decision-makers worldwide and mentioned that the software can be rolled our via silent install using an MSI package if desired.

One point the trio made which is important to repeat is that in a typical branch office which does not have technology to take advantage of a shared cache, you can have clients competing with each other for bandwidth as they are utterly blind to the needs and presence of the other clients. When you think about it, a shared cache is infinitely logical and as the need for more bandwidth increases we can expect this sort of technology to be deployed in more and more corporate branches.

As companies roll out more cloud computing applications and install IP communications solutions, focus on compliance and centralized backups, we can only expect the opportunity for Expand Networks dare I say - to Expand?

Google Wave is an ambitious project from Google which allows true real-time communications by integrating chat, email, a wiki, social networking tools and more. In many ways it competes with other services such as Facebook and as such it really isn't that new. Still, it does seem slicker and it is more open than many other services which provide communications solutions (a promotional plug -- you may want to check out TMCnet's newest news-driven Global Online Community called Communications Solutions). It also allows real-time IM sessions meaning you can see what the other person is typing before they hit enter.

Some think the company is being arrogant with this launch because as usual they seem to think about products first and profits second. Others think the breadth of features included in Wave could mean that Gmail and Docs are history.

My thoughts are that Google has done a poor job in the social networking space to date and initiatives like Google Voice haven't blown us away. Gmail of course is a solid product and took share from Yahoo! and Microsoft and allowed Google to show targeted ads to millions of users while they viewed their email.

So from where I stand, if Wave becomes successful and is somehow integrated into the Google product family, it could indeed give a Google-sized boost to the bottom line because you can bet that your communications will have embedded ads which are selected based on the keywords you use in the communications.

Google still owns the world's largest ad network and subsequently has relationships with more global advertisers than any other company. This means they have all the incentive in the world to make Google Wave a very popular service and even if the new offering achieves a few percent penetration, it will offer millions and millions of new page views for advertiser monetization.

One last point - the timing of this product is especially curious as it seems to put Google more in the space occupied by Microsoft at a time when the operating system leader is focusing more on search and will launch a new marketing campaign to push it. Moreover it reminds me a bit of the Palm Pre in the way it integrates various services and is open... And the Pre should roll out next week.

Finally, today - it was announced that AOL will be spun out of Time Warner and to me AOL was the original service which allowed real-time communications between its members. Now it is a shadow of its former self.

My view is that communications is continuing to evolve and this move is good for consumers - even if Wave fails and some of its concepts get rolled into other platforms.

On a recent flight back from Europe I marveled at the ice littering the North Atlantic. A flight attendant told me it was sad as what appeared to be ice cubes from a mile or more in the air used to be icebergs. I am concerned about the environment but I am not sure I agree with the carbon cap and trade system being proposed in the US as it could adversely impact the economy.

But last I checked, regulation gets passed without my express permission and in a world where CO2 is becoming a pollutant, you need to be more aware of energy use and carbon emissions than ever before.

I am especially looking forward to the upcoming sponsored TelcoBridges webinar on TMCnet which will help educate the market on how data centers can lower their energy use.

Even if cap and trade does not become reality this year it is apparent that governments are more and more likely to impose penalties for carbon emissions. Since reducing energy use saves money as well, it behooves everyone with data center decision making authority to be part of this timely event.

Even before it was trendy, I was a fan of 3D HD voice - In fact back in 2004 I featured DiamondWare onstage at ITEXPO in Miami as a killer app. Over the years DiamondWare began integrating its technology into a virtual world and eventually the company was sold to Nortel and became part of web.alive which I covered here.

My last visit to the Ottawa campus of Nortel consisted of meetings with the tech team who told me they eventually see avatars everywhere - on cell phones, computers, etc.

Since that conversation I have been looking for signs of avatar/communications integration and I did compile a list of vendors who had an avatar strategy.

But here is the reality - if we are going to start seeing more avatar integration in telecom it has to come from our kids - just like text messaging, Twitter, Facebook and lots of other interesting technologies we once considered oddities.

Recently I learned that Second Life - the popular consumer based avatar laden community generates 15 billion minutes of web voice - or VoIP calls. And this reminded me of the popularity in the early days of Twitter and Facebook.

It remains to be seen if avatars will become mainstream but I get the feeling that this technology may just follow Twitter as a hot new thing everyone jumps on in years to come.

If you are looking to take advantage of avatar/communications integration the question you need to ask is whether you want to get involved now, before it becomes hip and trendy or wait for Oprah and Ashton to jump in first.

For nearly 13 years, Greg Galitzine has been a tremendously valuable part of the TMC team. His career started as an editor for CTI Magazine in 1996. Where he reported on the collision of the computer and communications spaces including what we called IP telephony back in the day. In 1997 we convened a meeting with Greg to explore whether it made sense to launch a publication in the IP telephony space. The outcome of the meeting was to launch what we hoped would become a cornerstone of what we hoped would be a new industry - Internet Telephony Magazine.

Greg became the editor of this publication and had the vision to see this is where the industry was going. Many companies in the communications space told us we were nuts for launching this publication as at the time there was no industry, just a few nerds calling each other on softphones.

Lo and behold, over the past decade this nerdy, niche technology revolutionized telecom to the point where business models have changed, new entrants have come into the telecom market and entire industries were transformed through international outsourcing made possible by inexpensive VoIP-based telephony.

In the last few years, Greg did a great job helping transform TMCnet into a major web force in communications and technology news. We are grateful to him for the years he has put in.

I am very happy for Greg as recently he has been given a great opportunity which involves a move to a new industry altogether. Galitzine has accepted a position with ISA, Inc., a prime contractor to the National Nuclear Security Administration and working in about 18 countries through Central and Eastern Europe to identify and interdict the illegal movement of materials for weapons of mass destruction. Greg will be taking his analytical and editorial skills to a higher level, contributing to national-level policy and operational support analysis for these major international nonproliferation undertakings.

While we all selfishly wish Greg wouldn't move on, we are happy for him and are sure he will make a tremendous impact in his new position.

Device and service convergence continues to accelerate and as it does, the complexity involved in creating new products and services increases. A counter to the trend of increasing complexity is the new multi-industry ng Connect Program, founded by Alcatel-Lucent which is establishing a rich and diverse ecosystem of infrastructure, device, content and applications for both mobile and fixed broadband networks including 4G, LTE, GPON and other ultra high bandwidth technologies.

The group accelerates the deployment of new devices and services by helping to determine interoperability across industries such as automotive, entertainment, wireless and consumer electronics. The value proposition for members include access to research, reduced development costs and a first mover advantage across markets. For carriers there is the increased use of broadband, reduced OPEX and churn and accelerated time to market.

For consumers the benefits include better integration of disparate entertainment systems, a higher level of value for devices which are part of this initiative, enhanced payment options and perhaps lower cost for a variety of next-gen services and devices.

To learn more about the group's progress I had a chance to interview Chris Carfagnini, Director of Emerging Technology & Media for Alcatel-Lucent via email. The interview is below.

What is the ultimate goal of the ng Connect Program?

The primary goal is to facilitate improved end user experiences on all forms of ultra high bandwidth broadband connections. By helping to bring new applications and services to market for next generation networks more quickly, the ng Connect Program will facilitate an expansion of the revenue base for network operators and others, offer members a chance to work with companies they may not have been able to collaborate with individually and expand their own market opportunities. By doing so, ng Connect will also deliver the benefits of a seamless broadband experience to mobile phones, computers, cars, gaming systems though this ecosystem of infrastructure, devices, content and applications. Users will be able to stream more content, run more sophisticated applications on-the-go, and communicate in the most popular formats of today, and tomorrow.

Who should join and why?

Any company that is interested in leveraging next generation networks in their future offerings, and are interested in learning more about it today, before it's implemented. Initially we are focused on industries that can bring innovation and capability in five key focus areas, although this is expected to grow in the future: Consumer Media & Entertainment, Enterprise Collaboration & e-Healthcare, Automotive Connectivity, Digital Signage and Computing Experience.

We currently have 18 member companies in a variety of industries and specialties including augmented reality, consumer & enterprise electronics, digital signage, music label, mobile games and compelling social networking/entertainment developers as well as leading technology companies in the education and automotive fields. The initial members in ng Connect Program include 4DK, Alcatel-Lucent, Atlantic Records, Buzznet, chumby, Connect2Media, dimedis, FISHLABS, HP, Kyocera Communications Inc., LearningMate, MediaTile, QNX, Samsung, SIGNEXX, Total Immersion, TuneWiki and Words & Numbers.

What is the primary reason companies are not joining?

We've been lucky that nearly every company we approach and have had the opportunity to discuss the ng Connect Program with, has become a member company, even some that are traditionally quite conservative see the value. In fact, our challenge isn't convincing companies to join once we've discussed the value of the program, it is determining which companies to bring into the program in which priority ... we have many, many companies in the funnel today.   Right now on the membership front, the focus is on educating people about who we are and our goals, the more companies we can reach, the more companies will join.

What is the most exciting part of your involvement with this group?

I work with Alcatel-Lucent who conceived and created the organization and I have been closely involved in helping this initiative get off the ground. The most fun is working with companies in industries not traditionally associated with telecom and seeing their eyes light up when they realize the value proposition of what next generation broadband networks and applications enablement can do for their business plans.

It's great because we at Alcatel-Lucent believe that a broad spectrum of companies must come together to collaborate in a strong ecosystem to innovate, remove business and technical barriers and define new business models to accelerate mass adoption of new services and devices for next generation networks.

There is currently an unmet demand scenario in the telecom services marketplace. Ultra high bandwidth networks will unleash the art of the possible for meeting these demands and creating exciting new user experiences.   The members of ng Connect represent multiple industries' key innovators within a framework to focus them collectively towards breakthrough innovations in both services and business models.

Do companies quickly understand the group's value proposition or does it take work to explain? 

Those within the ICT (Information and Communication Technology) sector clearly understand immediately but even those in diverse industries, who have not, to this point, engaged deeply with communications technology, understand very quickly and are eager to start which is why we've been able to sign up 18 companies in a very short time.

Does the success of the organization depend on any particular companies or is critical mass most important?

As an ecosystem, it's most important to have key players in each of the segments we are focusing on that include both large, well-established companies as well as the smaller, nimbler start-ups. We are extremely happy with our current membership and look forward to expanding it.

When will companies see the benefits the group has to offer?

Companies, both our customers and potential new members, can see it today. To date the membership have collaboratively developed 6 Proof of Concept demos and there are many more in the funnel.   In addition to visiting our labs, many of these demos can be seen at tradeshows. In fact at CTIA Wireless we had six Proofs of Concept in the Alcatel-Lucent booth under the ng Connect banner, including a Mobile Enhanced Reality demo, with member companies 4DK and Total Immersion that was recognized with an E-Tech Award from CTIA. 

How about consumers? Will we see a day where ng Connect becomes a recognizable consumer logo?

While that might be flattering, the goal is not to create a Consumer brand, but to facilitate innovation that allows consumers, member companies and service providers and network operators to experience the value of what next generation broadband can enable. It would be optimal though, if ng Connect was eventually recognized by multiple industries as a key "enabler" organization. 

What benchmarks have you set to gauge future success?

Clearly, the ability to collaborate and rapidly create compelling proofs of concept demonstrations for new services and experiences is a key benchmark.   We measure ourselves on our ability to demonstrate the "art of the possible" over broadband networks. Also, attracting key members from many industries to help drive demand and remove barriers to innovation will help enable new business models for all along the digital media value chain and improving uptake of new technologies and services.

How do prospective new companies learn more?

Interested companies can go to our website where we have lots of information on upcoming events, current members and our blog.

It looks like Nortel could be gone as a standalone company in the next few weeks according to published reports. The news is sad but true. It looks like Avaya or Siemens could pick up the enterprise pieces. The optical division could go to Fujitsu, Huaweii, Alcatel-Lucent or potentially a private equity firm. The wireless unit could go to NSN.

What is terrible about the situation from my perspective is the communications and tech spaces are doing well relative to most other markets. In other words, this downturn for these markets has not been terrible. And there is a chance we could see these spaces bounce back faster than other industries.

This IMHO makes the Nortel assets very valuable as they are going for bargain-basement prices and their upside potential is probably good.

I should mention that some of the companies on the list above are not known for their customer facing marketing... If you are one of those companies you will likely not see the value from the assets you pick up.

The real value here is to put a better sales and marketing engine in front of some of the best engineering around. If that is done it will be the best possible outcome for employees, customers and the acquirers.

If you look at TMC from the outside and find yourself asking how you can get a job as an intern at this global integrated media company which builds communities online, in print and in person while gaining marketshare regardless of economic climate, I have some great news to share. We are looking for a small army of interns who want to learn what it's like to take on major multibillion dollar media companies with infinite resources and consistently win.

We will teach you how to sell collaboratively - how to listen and to be loved by your customers (well most of them anyway).

We will teach you integrated marketing and online marketing - not theory but ever-evolving practice.

If you love media and want to work at the company that is light years ahead online, contact us ASAP. We are very picky so if you aren't a super-hard worker and collaboration and hat-wearing are not your middle names, let's end our relationship now as friends (it's not you it's me).

One last thought about TMC - our culture is unusual - we have the financial stability of a 37 year-old company with the energy and enthusiasm of a start-up.

Let's just say if you're thinking of contacting us, please don't delay


Here's more:

The Sales & Marketing internship position at TMC is designed to provide hands-on experience that will be mutually beneficial for both the intern and the organization. The internship position is designed to challenge students and provide them with practical experience in the advertising and media industry.

TMC is looking for a dynamic, creative, enthusiastic, high energy professional to support the Sales organization, to help build advertising and marketing presentations for prospects and clients.

• Work with sales & marketing team to assist in the implementation of various campaigns
• Contribute to the creative input in building campaigns and support the campaigns
• Copyediting and proofreading
• Communicate with customers and peers
• Minimum Qualifications:
• Working towards completion of a college degree program in business, marketing or communication
• Excellent communication skills verbal and written
• Proficient in Microsoft Office suite, specifically PowerPoint and Excel
• Excellent communication skills
• Detail Oriented
• Initiative and proactive thinking
• Team player
• Ability to multi-task and work in a fast paced environment meeting deadlines