Nortel Sets Its Sights On Partner Profitability

Nortel Networks is preparing to launch a new channel program aimed at boosting partner profitability as it strives to grow its enterprise business and gain market share against rivals such as Cisco Systems.

"[The program is] really based on performance, profitability, growth and commitment to the brand," said Malcolm Collins, president of the Enterprise Networks division at Nortel, Brampton, Ontario.

Nortel plans to announce the still-developing program in October and go live with it in January, Collins said.

Collins: The new program is based on performance, profitability and growth.

The company's plan to include in the program incentives for partners that invest in certification and training is "a nice improvement in the way they do business," said Richard Zimmermann, executive director of channel management at NextiraOne, a Houston-based systems integrator that took an early look at the program. "We're not just moving boxes. We provide planning and design [and] flawless implementation %85 and there's a lot of cost in training for us to be able to do that, so they're rewarding our investment," Zimmermann said.

He also applauded Nortel's proposal to reward early-adopter solution providers that participate in beta testing and trials.

The new program is Nortel's latest step toward boosting its enterprise networking and IP telephony business as the service-provider sector continues to struggle.

Earlier this year, the company implemented the Volume Incentive Value Incentive Discount (VIVID) plan, which provides volume discounts to Premium partners, as well as price breaks for maintaining high levels of customer satisfaction and for building up services infrastructure.

The vendor also implemented a new branch model that puts its sales reps in front of customers while ensuring fulfillment through partners.

The Enterprise Networks division continues to be profitable despite a 14 percent decline in business during the second quarter compared with the same quarter a year ago. Collins attributed the decline to the economy and to partners' need to adjust to the branch model and incentive programs.

"We've got our momentum back as we move to Q3," he said. "There's brightness in the U.S. now. Customers are feeling a little bit more confident moving forward than they have in the past."

Nortel's renewed interest in the enterprise space is evident in its product strategy, partners said.

"The good news for us is Nortel is putting together what we think are some very competitive products in key areas," said Steve Thorpe, president of Adaptive Communications, Portsmouth, N.H. As examples, he pointed to the boost to security features in Nortel's Layer 4-7 Alteon application switch line and its new lineup of wireless LAN products.