Article

Nortel takes on Cisco with energy savings credit incentive

Rivka Gewirtz Little, Senior News Writer
Nortel is taking another swipe at Cisco Systems

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with an incentive program that credits new data networking customers the amount of money they would save on power by choosing Nortel's equipment over Cisco's.

The incentive is meant to be used by partners to draw new customers to their Nortel practices -- including those that are currently using Cisco equipment.

The energy savings credit program uses Nortel's Energy Efficiency Calculator to determine the energy savings for Nortel equipment, then credits customers that exact amount on their purchase. The incentive is available to customers that are new to Nortel's data solutions and have network sites in North America, and to current customers that didn't purchase data equipment between January 2005 and December 2007. It is also available to Nortel voice customers.

"Nortel is putting its money where its mouth is," said Net Payne, Nortel's vice president of North America marketing. "We're using the energy savings credit in order to show [customers] that Nortel delivers both energy savings and performance resiliency."

The Energy Efficiency Calculator is an online tool that lets channel partners and their customers compare pricing between Nortel and Cisco data networking equipment. Partners enter information, including configuration type, local power costs and other factors, to produce potential energy costs for both sets of equipment.

In its green campaign, Nortel has targeted Cisco, but not other companies -- even Hewlett-Packard (HP), which offers extensive energy-efficient data center equipment. Payne said that Nortel will eventually add HP and possibly other companies into the energy calculator, but for now, it's all about taking on "the dominant market share leader."

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"Customers are paying the Cisco energy tax, and they are doing it unknowingly," Payne said.

Cisco doesn't comment on competitors' campaigns. However, back in June, Cisco said that its equipment meets the standards of product testing company Miercom. In April, Miercom announced a green testing and certification program, and Cisco switches were the first to be certified. Miercom said in a statement that Cisco products had "efficient power draw under various real-world network conditions." Cisco also launched the Cisco Efficiency Assurance Program to help users and partners with efficiency in design and planning.

Meanwhile, Nortel partners say the Energy Efficiency Calculator speaks for itself.

"We're into global enterprise accounts that would never have considered switching from their Cisco infrastructure," said John Wrona, executive vice president of sales and marketing at Nortel partner Ronco Communications & Electronics in Tonawanda, N.Y. He said that he has shown companies savings of between 40% and 60% on energy. With oil prices so high, Wrona said, it's not "financially responsible" for CFOs not to consider an alternative to Cisco.

Nortel's problem, Wrona said, isn't that the equipment is inferior to Cisco's.

"The big problem with Nortel has always been marketing," Wrona said. "They haven't gotten their name out enough." This energy savings credit and the calculator are great ways of doing exactly that, Wrona added.

"[The incentive] is an incredibly powerful tool," he said.

Nortel has been on a green campaign for months now, and in the spring it announced that a third-party testing company, the Tolly Group, found its data equipment consumes up to 40% less power than Cisco's. The Tolly study was commissioned by Nortel.

Armed with that information, Nortel launched a series of Web and print ads accusing Cisco of producing energy-hungry equipment. The Wall Street Journal dubbed the campaign a David-and-Goliath battle, noting that Nortel owns only about 4% of the market for enterprise communications networks, while Cisco largely dominates the arena.

During that same period, Nortel dubbed Cisco's data networking pricing "The Cisco Energy Tax" and actually bought the Internet domain names "CiscoEnergyTax.com" and "YourCiscoEnergyTax.com." Nortel dropped those domain names after Cisco complained.

Then Nortel launched the Energy Efficiency Calculator, and now Nortel has taken the green war with Cisco to the next level with the energy savings credit program, which runs through Dec. 12.


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