'Nortel plans to lead in next generation mobility and convergence'

On his first visit to India after taking over as president and
CEO, Mike S Zafirovski is looking at India as an emerging market in the
4G space. Under his leadership, the new Nortel is emerging, and the company is
planning to focus on WiMax, carrier Ethernet, unified communications, and
services.

Zafirovski joined Nortel in 2005 and has drawn on his depth of
global business expertise to drive sustainable business improvements within the
company. In an email interview with VOICE&DATA,Mike S Zafirovski
talked about Nortel's plans for business transformation, R&D focus, CDMA,
and services strategy. Excerpts:

How successful have you been with respect to your vision
statement of 'Business Made Simple' since you joined Nortel?

We have made great progress. As we enter the new age of communications we
refer to as hyper-connectivity-where anything that can be connected to the
network, will be connected-it is essential to drive complexity out of the
network and out of our customers' businesses. We are using our breadth of
vision, our capabilities across the carrier and enterprise, wireless and
wireline, infrastructure and applications.

Nortel's strategic direction across our business-from
R&D, to marketing to customer service-is focused on making it easy for
customers to capitalize on the opportunity that hyper-connectivity presents.
Technologies like WiMax, to deliver the true broadband mobility users require
and carrier Ethernet, providing a simpler and more cost effective broadband
transport system are key to this.

For enterprises, unified communications is delivering
productivity gains, cost savings, and a simplified user experience across
multiple fixed and mobile devices. This is an exciting area of growth where
Nortel is leading the way through its Innovative Communications Alliance with
Microsoft, as well as the partnership with IBM.

The top priority for Nortel in 2006 was to restore financial
strength. How successful were you on that front, and what are your plans for
business transformation in 2007 and 2008?

I am very pleased to report that today Nortel is very different. A new
Nortel is emerging-one that is focused on the customer and the future. We are
on the strongest position in years, with a very clear direction and a strategy
that is really starting to pay off. Our operations are becoming more effective
and simpler, with a renewed focus. And our customers have started to respond. We
are earning very important wins-contracts that represent long-term
partnerships between the company and its customers.

There are a couple of key areas of progress that I'd like to
address. Enterprise sales have been particularly strong-enterprise revenues in
Q2 FY '07 showed an increase of 23% compared to the year-ago quarter. Revenues
were up 3% sequentially and we are confident that the traction with customers
will translate into much higher sequential growth. The goal is to achieve
double-digit operating margin.

It is my belief that our continued focus and strong performance
will be recognized by the market and we will continue to make progress faster,
deeper, and more effectively through accelerated execution even in the future.

Nortel plans to focus on three pillars-transformed enterprise,
next generation mobility and convergence, and services and solutions. So how do
you plan to move vis-à-vis your competitors?

Yes, absolutely. Nortel plans to lead in next generation mobility and
convergence. We are making a big commitment to WiMax, and have invested
significantly to ensure our success. We now have WiMax customers, and trials are
ongoing across the globe. We have committed to services as an area of focus. We
have generated approximately 20% of our revenue in services, and plans are to
double it over the next three to five years. We have a very strong position in
enterprise transformation where we are accelerating and simplifying the process
of going from the PBX world to VoIP. Through our Innovative Communications
Alliance with Microsoft, we are delivering unified communications solutions to
customers that are helping them to enhance productivity and reduce costs.

Nortel is number two worldwide in optical transmission but in
India it occupies fifth position. Your comments?

Nortel's heritage in the optical space is well documented, and we continue
to lead and to innovate in this area. We have developed technologies like common
photonic layer (CPL), which delivers high-bandwidth and mission critical
applications across greater distances than ever before, with absolute
reliability. And, our Carrier Ethernet solutions are driving the future and
bringing the power of optical technology to new and exciting applications, at a
cost point that didn't seem achievable a few years ago.

In India, in the recent years, Nortel focused on a smaller
number of opportunities in the optical arena. Many of the carriers here are
planning expansions over the next couple of years, and we are actively engaged
in those opportunities. I firmly believe our technology portfolio, breadth of
understanding and experience, and our clear vision of the hyper-connected future
make us an ideal choice.

On the R&D front, the company is planning to reduce its
spend from 17% to around 15%. Do you see any change with respect to outsourced
product development strategy in India?

Nortel has had a long-standing relationship with Indian companies like Wipro,
TCS, Sasken, and Infosys for outsourced R&D. Indeed, Nortel was a pioneer in
the outsourcing model in India, beginning over 16 years ago.

We have also established a Nortel Technology Excellence Centre
in Bangalore focusing on new product design, development, and testing. It
represents an integral part of Nortel's global R&D capabilities, and is
especially focused on advanced routers, Ethernet switching, security, and VoIP
technologies. We are transforming our business and our cost base at Nortel, and
it is efficiency gain rather than program reduction which is driving the change
to overall spending.

Do you plan to move up in CDMA or have you given your turf to
Chinese players like Huawei and ZTE?

India represents a challenging wireless market and competition is fierce.
But we believe we have the most effective next generation wireless products that
can bring big value to Indian operators.

Nortel is focused on delivering the next generation wireless
broadband capabilities across multiple technologies-including the evolution of
CDMA to ultra mobile broadband (UMB). Nortel is already an industry leader in
1xEV-DO, and UMB is an evolutionary leap of the technology that is poised to
deliver five times the performance and three to five times greater capacity than
today's most advanced 3G networks. UMB and other technologies like WiMax and
LTE are poised to deliver hyperconnected capabilities that consumers want.

How do you plan to move ahead with your Metro Ethernet business?

As the first vendor to support provider backbone transport technology,
Nortel is charting the course for the future of carrier network infrastructures
with the simplicity and cost-effectiveness of Ethernet. Our metro Ethernet
portfolio is truly market changing as it delivers the first deterministic,
scalable, and operationally simple Ethernet transport.

Service providers can leverage their existing Ethernet hardware,
operations paradigm, and knowledge base.

The company is betting big on WiMax. What would be your strategy
on its deployment in India? Are you focusing both on fixed as well as mobile
WiMax?

Nortel is a leader in the WiMax space. We have customers and trials across
the globe, and we helped invent the OFDM and MIMO technologies which are
fundamental to the performance of mobile WiMax. We are entrenched in fixed WiMax
and have a long string of mobile WiMax technology firsts.

India, with its low penetration rates of wireline-especially
broadband technologies-represents a great opportunity for WiMax. I believe
WiMax will play an integral role in helping India to reach its target of 20 mn
subscribers by 2010.

We have established a Center of Excellence in Taiwan, working
with device and chipset makers to create an entire WiMax ecosystem to work
collaboratively to launch WiMax services. We are also working on new base
station capabilities with Toshiba in Japan, and leveraging our LG-Nortel joint
venture in Korea. We have established a WiMax experience center at Gurgaon to
demonstrate fixed WiMax capabilities.

How do you plan to leverage India for your worldwide services
and solutions strategy?

India has been, is, and will remain a fundamental piece in supporting Nortel's
global business, as well as representing a very important market. We offer a
complete suite of full-scale service and solution offerings designed to give
customers the unique advantage of working with the same partner to deploy,
manage, and evolve their networks.

We deliver on our 'Business Made Simple' promise not only by
simplifying network operations, opening up additional streams of revenue, and
reducing network operational costs, but also by preparing companies for network
evolution so they can begin to unleash the true power of their business
potential for future growth.

Pravin Prashant

pravinp@cybermedia.co.in