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At VoiceCon, Nortel customers uneasy about vendor's future

VoiceCon held a special session for Nortel customers this week, giving them an opportunity to talk about the bankrupt company and to ask direct questions of Joel Hackney, president of Nortel's enterprise business.

The title of a Tuesday afternoon session at VoiceCon this week said it all: "I'm a Nortel customer. What do I do now?"

Since the Canadian networking and telecommunications giant filed for Chapter 11 bankruptcy protection last fall, Nortel Networks customers have been uneasy about the company's future. It is difficult to invest in technology from a company that may or may not be around in two or three years. It's especially hard to buy a phone system from such a company, given how many years of use an enterprise expects to get from such a technology purchase.

With that in mind, VoiceCon organizers staged a special roundtable session for Nortel customers, where they could discuss their feelings about the faltering company. Joel Hackney, president of Nortel Enterprise Solutions, was also at the session to answer questions from customers.

The session was in a rather small conference room with seating for 20 or 25 people. But as the room continued to fill with Nortel customers, conference organizers cancelled a neighboring session and removed the temporary wall separating two conference rooms in order to make room for the standing-room-only crowd.

Victor Boehnert, executive director of the International Nortel Networks Users Association (INNUA), moderated the discussion. He noted that his organization remains firmly in support of Nortel. INNUA recently polled its membership and found that 80% of members are moving ahead with planned deployments of Nortel technology.

Boehnert framed the session as an opportunity for Nortel customers to have a conversation about the company's situation, but it quickly became a question-and-answer session with Hackney. Some customers expressed support for Nortel as they questioned him. Others seemed angry. And still others seemed concerned for the company's future.

Referring to Hackney's efforts to build trust in Nortel with its customer base, one customer asked him why anyone should trust the company when Nortel recently cut severance packages for employees who were laid off before the bankruptcy filing.

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News Editor Shamus McGillicuddy Twittered during this session on Nortel and throughout VoiceCon. To read what he was hearing and saying about VoiceCon this week, check out his Twitter feed at

"How can you build trust with the customer base for a company that made those types of decisions?" the customer asked.

Hackney said cutting severance packages was a difficult but necessary decision. He said Nortel was required to meet its obligations to customers and suppliers, even if that meant reneging on its commitment to those former employees.

Another customer said he needed to make a major investment in a telephony system, but it was hard for him to consider Nortel.

"I'm looking to replace 10,000 lines of TDM equipment," the customer said. "My heart is with Nortel. The problem is, the more uncertain people like me are, the less likely someone like me is going to buy into a new system from you. And that snowball starts rolling downhill. I'm not trying to be rude, but what I've heard so far is a marketing message. You haven't talked to us about what customers who may want to go forward can do to get over this uncertainty."

Hackney said that Nortel is trying to allay fear and uncertainty by going out into the market and talking to customers about its vision for communications, publishing white papers, and demonstrating thought leadership.

Nortel had a strong presence at VoiceCon, with a large, heavily staffed booth. It introduced several new unified communications capabilities.

Hackney said Nortel is also working with channel partners to ease customers' minds.

"We continue to be a very channel-dependent business," he said. "So we go out with our channel partners to our end customers. If you have a concern about our ability to support you or your investment decision today, let us talk to you not only from a Nortel perspective but from a channel perspective, too, and their ability to support you over time."

"Those channel partners, they're out pushing other products," one customer blurted out. "They're pushing Cisco. How do you get that message out when those people you rely on are turning elsewhere?"

"There are some channel partners who are hedging their bets," Hackney said. He added that Nortel has signed new channel partners in just the last 30 days.

Nortel is due to file its restructuring plan in bankruptcy court in May. Hackney said he wished he could share that filing with customers ahead of time in order to ease their worries, but that it was not legally possible.

Hackney said that Nortel is continuing to earn customer wins. Another executive said that Nortel recently signed a company he identified as "the GE of India" as a customer. He was probably referring to Reliance Industries, a $35.9 billion conglomerate.

Hackney also pointed to the U.S. Social Security Administration (SSA), which had signed with Nortel prior to bankruptcy. The SSA looked at whether or not to back out of the deal, but decided to stay on. It plans to implement a Nortel VoIP system for 125,000 users, the largest VoIP implementation in the world.

"We're only 10% into the project, but we're ahead of budget, ahead of timeline, and they're pleased," Hackney said.

As the session wound down, customers seemed to be unmoved one way or the other by what they heard.

"It didn't make it any worse or better for me," said one telecommunications manager who asked not to be identified. "It just proved to me that what I'm thinking is what a lot of other users are thinking. This room was packed."

The telecommunications manager, who said he's been a Nortel customer for 20 years, came to VoiceCon this week specifically to look at what other vendors are doing.

"I'm familiar with some of the market, but some of the newer players, like Siemens and NEC, I just want to find out more about," he said. "That was the main motivation to come to VoiceCon. I've tended to go to the user conferences that are more Nortel-centric. [VoiceCon] is more of a holistic view of the entire industry. It's been a good eye-opener."

When asked whether it was difficult to remain a loyal customer of Nortel after 20 years of buying from the company, the telecommunications manager interrupted the interviewer: "I'm loyal to the functionality for my users, and Nortel has always provided it. And I'm sure they will continue to in the short and medium term. But phone systems last a long time, and I want to make sure anything I purchase will last for its expected life and be fully supported and have new features and functionality. I'm not worried about Nortel over the next two years, but about its ability to support the lifecycle of something that I buy in the next year or two."

Let us know what you think about the story; email: Shamus McGillicuddy, News Editor

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