Main Page | See live article | Alphabetical index

Nortel Networks

Nortel Networks, commonly known as Nortel, is a communications equipment manufacturer, headquartered in Canada, formerly called Northern Telecom (NT) and, previous to that, Northern Electric. Its research arm was called Bell-Northern Research (BNR).

Once the darling of the Canadian business establishment, since September 2000 Nortel's market capitalization has fallen from $398 billion Canadian to less than $5 billion in August 2002. The decline has wiped out the investments of pension funds, corporate backers, and ordinary individuals.

While Nortel's stock price plunged from $124 to $1.50, and more than 60,000 Nortel employees have lost their jobs, CEO John Roth cashed in his stock options for a personal gain of more than $100 million and retired.

In a desperate bid to stem the tide of red ink, Nortel eliminated entire departments, including in areas that it had previously described as integral to its core operations. Some complained that the company spent too much money to acquire smaller companies and then close them down within months.

At its height, Nortel accounted for more than a third of the total valuation of all the companies listed on the Toronto Stock Exchange (TSX), Canada's largest. Today, it is a penny stock and the possibility of bankruptcy looms large.

Nortel was long the main equipment supplier to Bell Canada, a role similar to Western Electric in the US. One major project was the DMS series of switches, used to replace the existing Bell crossbar systems in the same fashion that the DS-1 did for AT&T.

Nortel then leveraged this same technology into a smaller package known as the Meridian, aimed at creating PBXs for medium-sized businesses. The Meridian became a big seller, it was an all-digital solution competing against analog systems of limited capability. Things became even more skewed with the introduction of the even smaller Norstar system, which could be hung on a wall and yet offered all the same features as Centrex systems you would normally have to lease. The Norstar became a huge seller and garnered much of the PBX business world-wide during the 1980s. This started Nortel on its road to glory.

The Meridian, based on the Motorola 68000 had extra power that was unused, so BNR started to create a series of applications to run on the system. The "dream" was a large integrated telephone/computer terminal connected to the Norstar over its 56k link (the telephone wire). Applications would run on the Norstar and this way Nortel could enter the computer market.

However the dream system simply didn't work, largely due to performance issues. Instead BNR rolled out a series of "one off" applications. Most famous of these is Meridian Mail which is probably the second-most-used voice mail system. Other applications included automatic call distribution, various PC based interfaces (for call routing) and various attempts to interest people in using the 56k links as a computer network.

After trying the latter for years with limited (or no) success in the networking arena, they eventually gave up in the 1990s when they saw that switch-packet network growth was outpacing telephone systems. They had no experience here, so they simply went out and bought the #2 company, Bay Networks. Bay's suite of IP, layer 2, products were added in to Nortel's product line.

External links