Nortel's SMB Onslaught


With its portfolio expansion, Nortel for the first time is adding SMB switching, secure routing and wireless LAN products to its existing SMB voice lineup, which includes its Business Communications Manager (BCM) 50 VoIP offering and Norstar key system family.

One Nortel partner, Barry Gerhardt, president of Barry Communications, Worcester, Mass., said the new wares are likely to displace Cisco Systems gear in many of his existing Nortel VoIP deployments and to provide larger deployment opportunities within new accounts. The new infrastructure lineup should also help solution providers looking to migrate current Norstar partners to the BCM platform, he said.

"We're now delivering a total converged solution to that SMB customer, and we're able to provide a one-stop shop and one support call for voice and data," Gerhardt said.

Barry Communications' Nortel product sales will grow at least 25 percent this year because of the new offerings, he said.

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Nortel estimates that its current share of the North American SMB market hovers around 18 percent, with SMB sales accounting for approximately 25 percent of its overall business, said Tony Pereira, portfolio business leader for SMB data at Nortel.

Until now, the vendor's SMB VoIP products have typically been coupled with infrastructure equipment from other vendors, including 3Com, Cisco, D-Link and Hewlett-Packard, Pereira said.

Among the new product lines is the Business Ethernet Switch 100 family, a line of managed 10/100 switches that includes 24-port and 48-port models as well as models with support for the 802.3af Power-over-Ethernet standard on half the ports. Pricing, not yet finalized, will likely range from $535 to $2,254, Nortel said.

Business Secure Router 222 incorporates broadband routing and data services with security features, including firewall, authentication and support for 802.1x/EAP. It is expected to carry a price of $578.

On the wireless front, Nortel is launching Business Access Point 120, a stand-alone access point for sites with 10 to 100 users that supports 802.11a/b/g. Pricing is expected to range from $550 to $605. Nortel is also launching BCM 4.0, the latest version of its VoIP platform software. The upgrade adds enhanced security and management features as well as support for additional phones. The new version marks the completion of Nortel's migration to Linux for its entire BCM platform, a move begun with the launch of the Linux-based BCM 50 last year.

The new products, which are scheduled for availability in August, are part of Nortel's effort to push its channel partners toward convergence.

"We have a strong dealer base already, but we will be looking to extend our reach in the SMB arena and bring on more resellers in that space," said Diane Guthman, leader of SMB marketing at Nortel, Brampton, Ontario. Nortel is "working through the numbers now" to determine how many new partners it needs to bring on, but the number will probably rest "more in the hundreds," she said.

In particular, Nortel will be seeking partners with skills in both voice and data to service business customers with five to 250 users, the target range of its SMB product portfolio.

"We do have resellers that are quite competent in convergence, but we're going to need more," Guthman said, noting that many partners are still focusing on their comfort zone, be it voice or data, and are not transitioning quickly enough toward the convergence of the two.

Guthman estimates that about 200 to 250 of Nortel's partners currently identify themselves as SMB-focused.

Nortel plans to tap some of its distribution partners to help it recruit and train new solution providers, efforts that initially will go through a select group of its distributors, which include Ingram Micro, Synnex, Tech Data and Westcon, Guthman said.

The new products debut a week after Nortel disclosed a wider first-quarter loss and slightly lower revenue compared with the same quarter a year ago.

For the quarter ended March 31, Nortel reported a loss of $167 million, or 4 cents per share, compared with a loss of $104 million, or 2 cents per share, in the year-ago quarter. Revenue for the quarter was $2.38 billion, compared with $2.39 billion last year. The company reaffirmed its forecast for high single-digit revenue growth for the year.