Juniper Networks launched a campaign this week to poach Nortel channel partners, capitalizing on the Canadian networking...
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company's financial woes.
Juniper channel chief Frank Vitagliano sent a letter to Nortel partners Monday that avoided direct mention of Nortel's financial struggles -- the company's stock has traded below a buck per share since Nov. 7 -- but kindly suggested that partners might be looking for alternatives during challenging times.
"In today's troubled climate, you may have concerns about your continued ability to provide high-performance networking solutions to your customers. We want to help," the letter read. "Our partner-dependent strategy means Juniper is always in support of your brand -- we want to be your partner, not your competitor."
But Nortel partners -- a zealously loyal group -- may not be all that interested.
"We've been selling Nortel and we're going to continue selling Nortel until you can pry Nortel from my cold, dead hand," said Stuart Chandler, CEO of Nortel partner Optivor Technologies in Jessup, Md.
In an interview, Vitagliano said the letter is not an assertion that the one-time legacy telecom giant Nortel will fold, forcing partners to seek alternatives.
"I wouldn't make that assumption at all. You can read what's in the paper," Vitagliano said. "There are a number of Nortel partners that will ultimately be looking for additional relationships, and I wanted to start that process in an aggressive way and hope to have some of those partners consider us."
It's true that news out of Nortel has been negative for months. Tuesday Nortel officially placed a "For Sale" sign on its Calgary campus, which the company said it would shutter last spring. Earlier this month, Nortel reported $3.4 billion in losses for the third quarter of 2008, as well as 1,300 layoffs and a hiring freeze. Back in September, Nortel said it would offset losses by selling its Metro Ethernet networking business, but Wall Street analysts are calling for a quick sale of the entire company.
Meanwhile, as Vitagliano's letter pointed out, Juniper has increased its market share and earnings.
"We recently closed our most successful quarter to date, with Q3 2008 revenues of $947 million, up 29% from the prior year," the letter said. Still, the company has seen its shares slip in value by almost half, as have most of its networking market competitors, including Cisco Systems.
It's not surprising that Vitagliano has taken this opportunity to move. When Vitagliano joined Juniper from IBM in 2006, he brought with him a cutthroat competitive spirit, making it clear he planned to take on the Cisco channel. This fall, he and his team spent three days at Ingram Micro's VentureTech Network conference approaching Cisco partners about jumping ship. And Juniper executives lined the auditorium walls as Cisco executives spoke at the conference. Nortel has long held a share of what could be Cisco -- or Juniper -- customers.
What's more, Nortel partners are an obvious mark for Juniper because of their skill set. Both Nortel and Juniper have long sold carrier-class networking equipment and launched a more recent push into enterprise networks. That means Nortel partners come ready to sell.
"We believe that these partners have the skills and capabilities," Vitagliano said. He said, however, there will be a few transitional bumps as partners learn the new program.
But Vitagliano stressed that the Nortel campaign also targets partners that have relationships with both Juniper and Nortel.
"The goal with those partners is we want a little more mindshare and we hope this helps us transition some business," Vitagliano said.
The campaign could also be a boost of confidence for Juniper partners, Vitagliano said.
"This is not just an overriding message to Nortel partners, but also to our existing partners that we're very committed to continuing our focus and building on the foundation with our existing J-Partner program," he said.
Optivor's Chandler doesn't doubt Juniper's product line or shrug the company off as a potential partner.
"Juniper makes fine products, and if I am looking to diversify, I will consider Juniper," Chandler said.
That said, Juniper doesn't have the kind of market recognition and penetration that Nortel has, in his view.
"How many Juniper certified people are out there? Not many. You put an ad in Monster and you get none," Chandler said.
"There are two outcomes," he added. "Either Nortel succeeds or fails. If they fail, then the partners are going to switch over to the next game. If they succeed the partners are going to stay there."
For Nortel partners seeking alternatives, Juniper set up a Nortel channel partner hotline and will offer a fast-track certification program and a number of incentives.