Again, all over the telecom press is the latest news about Ciena’s bid for Nortel’s MEN business. Links to full stories in the regular press:
The details of this bid somewhat obsolete my blog post from yesterday as the financial aspects of the bid were made public.
From a financial perspective, this could be a great deal for Ciena as they are able to purchase a business worth $1.3+ Billion for $541million. Furthermore it looks like Ciena can do this all with cash and securities so debt doesn’t seem to be a factor.
however….what’s the long term impact…..
After doing a bit of research about the Nortel Optical platforms I feel that from an optical perspective there is quite a bit of product overlap. If we compare the Ciena 4200 and the Nortel 6500 then we’re talking about two Metro-Regional DWDM products. From my experience product overlap does nothing but confuse customers during sales execution and can cripple brand perception. I’m sure this is a known issue and I hope that the Sales Management at Ciena are formulating a plan to overcome this well-known potential problem.
Just to add to yesterday’s post I’d like to mention again that we’re talking about significant challenges with integrating the two Ethernet portfolios together. In addition to the potential market confusion and brand perception damage there are challenges in technology leadership perception.
We cannot lose sight of the fact that we’re talking about two PBB/PBT champions coming together. For those of us who have relied on these technologies in our Metro then this is good news. However, traction in the marketplace for this technology family has not been forthcoming and I fear it’s days are numbered.
Ciena has committed to supporting alternative technologies based upon MPLS to ensure their customer have options. We’ll see if the Nortel gear is capable of this flexibility.
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