Nortel's CTO targets Cisco

John Roese becomes chief technology officer at Nortel Networks in Ontario, this week following his appointment to the post last week. Roese (pronounced Rose), 35, will lead more than 12,000 engineers and developers in the Nortel research and development headquarters in Ottawa and will be responsible for the company's R&D strategy and execution. Before joining Nortel, he was CTO at Broadcom for three months, and before that, he held the CTO title at Enterasys Networks and Cabletron. He talked with Computerworld US about Nortel's future.

What does John Roese bring to Nortel?

A technology company without a dedicated focal point for the technology community is at risk of drifting. It's extremely important that there be a CTO at a company like this to keep people on target and provide a litmus test as to whether you are moving in the right direction. When I was CTO of Cabletron, I was a Nortel partner early on, and then a competitor when Nortel bought Bay Networks. I understand the enterprise and metropolitan-area network space.

You left Broadcom after a short stint there. What changed?

I was fairly happy at Broadcom. First I said no to Nortel, and then with more visibility, saw Nortel was a US$10 billion enterprise, with 12,000 R&D folks and a brand that was still in pretty good shape. There was a technology basis and engineering expertise here. Nortel is doing great things and nobody seems to know that. I saw five things that Nortel has: enterprise wireline and wireless, carrier wireline and wireless, and most important of all, application and middleware software frameworks. What I found was this company had a tremendous investment in middleware to unify those various networks.

What are the biggest things Nortel needs to improve upon?

Well, two things. One, we have to behave like the company we are -- like the broad company that builds communication systems. Each silo of products is a part, but you can't just build a product in a cell and hope it works in the enterprise.

Two, we have to tell our story. CTOs are mostly about technology and part about marketing. The reality is when I went out to talk to companies, I got a good response from Nortel customers, and when I stepped outside of Nortel customers, people didn't know how big Nortel was. If we don't communicate well and claim our place, the execution will be hamstrung. Customers want choice. They need to have an alternative to the Cisco marketing machine that tells people they have no other options. We have to communicate that.

Will you be advising CEO Mike Zafirovski on potential companies to buy to improve Nortel technology?

Yes. There probably are gaps in our technology. We can fill them organizationally with internal development and partnerships with IBM and Microsoft and many others. There are always opportunities to acquire, but you don't acquire without expertise like we have. Many companies don't know how to integrate new companies.

What will Nortel's leading technology area be in, say, five years?

It's tough to predict five years in the future. But I'm going to spend a lot of my time to make sure it happens that we lead in the enterprise infrastructure business. The enterprise market is desperately looking for an alternative to Cisco. They really want someone to step up with scale, brand and technology solutions. And when I look around, the only candidate is Nortel. The market needs someone to go head-to-head with Cisco. Nortel may be one half the US$12 billion in enterprise revenues of Cisco, but what I believe from talking to enterprise customers is that if anyone with scale, brand and technology starts to behave like an alternative to Cisco, there will be a relative shift because the market is out of balance.

Since you mention Cisco, what's your reaction to Cisco CEO John Chambers recent comments that Cisco needs to consider charging separately for software embedded in hardware and that it probably doesn't charge enough for software?

That comment is a great symptom of Cisco functioning as a provider of pipes. They don't seem to have an economic model around software in their application and connectivity business. Cisco's genesis has always been as a purveyor of pipes. In the customer mind-set, the least significant part is probably the pipe. It's providing network capacity in a secure and useful way that's important to the customer.

OK, I hear what you are saying about how Nortel's existing customers like Nortel, even love Nortel. But what do you say to the New York-based customer I met who has thousands of users on Avaya phones and is considering alternative vendors, since Avaya may triple his software prices? He said he's considering Cisco and Alcatel, but would not touch Nortel because of the taint of financial restatements in recent years by Nortel.

Well, shame on us for not engaging him appropriately. I wonder if he has the right information about our company. If the first time a person hears about us is from a salesperson and if that customer's only experience is a negative public impression, it's tough to sell him.

The doors inside the installed Nortel base are definitely open. How we will generate growth is from competitive displacement. To get pull in the market won't necessarily come from the creation of new products. It's from shifting Nortel from an inward focus toward creating noise about the good things going on. The negative press about financial restatements or executive replacements are countered by talking about who uses Nortel. That has not been done.

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