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Nortel targets SMB market with new hybrid IP products

Amidst financial troubles, Nortel has released new hybrid IP/UC products for the SMB market.

Despite its highly publicized financial trouble, life goes on at Nortel. The struggling networking company launched two hybrid IP telephony/unified communications (UC) products aimed at the small and medium-sized business (SMB) market Wednesday.

The release comes just one day after the company's shares slipped to their lowest point of an already troubled year, hitting $1.67 Tuesday afternoon. The year's high was nearly $20. Nortel was also downgraded by RBC Capital Monday to "underperform." While other networking companies have been hit by the free-falling market, few have struggled like Nortel.

Still, Nortel moved forward with the release, calling itself a leader in the SMB market, which is fertile ground for growth these days, especially in UC.

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One of the products released, the Business Communications Manager (BCM) 450, is a higher-capacity version of Nortel's BCM 50, a hybrid IP-PBX targeted at tiny businesses. Nortel said the 450 serves the "MB" part of "SMB" -- medium-sized businesses with up to 300 phones. The hybrid IP approach means that companies can use their existing digital telephony equipment for VoIP and unified communications applications using a hybrid platform that enables SIP trunking.

"This is like the BCM 50 on steroids," said Steve Hall, executive director of product marketing management at AT&T, a Nortel partner. "The 450 is going to open new market opportunities with the capacity to serve a larger SMB base." The medium-sized business market specifically didn't have a product match previously, Hall said.

Nortel is pushing the product as the perfect answer to a tough economy, since the hybrid IP approach enables users to maintain existing technology. Nortel press releases say users will save up to 70% of existing technology investment.

The Business Communications Manager 450 is based on the same open source operating system as other Nortel IP telephony platforms and enables computer-telephony integration, meaning that outside applications can control telephony services. That means, for example, that the technology enables click-to-call features. The UC package also enables teleconferencing, message forwarding, consolidation of email, fax and voicemail, and contact center functions.

"SMB customers are demanding," said David Wilkinson, Nortel's vice president of North American channel strategy. "They want the same features that large enterprise customers want."

Nortel also launched the Business Services Gateway (BSG) 8, which combines a router, firewall, VPN, SIP gateway with Analog Telephony Adapter and an application prioritization function to optimize applications like VoIP that can't afford latency.

"Before you would have to buy separate hardware and software to get the same functionality," Wilkinson said. "We've combined all those into one box now."

Though it can be used as a gateway within an enterprise network, Nortel is also pushing the product as a client-side data infrastructure for carriers who deliver hosted VoIP services to the SMB market.

"If you have a small business that has 20 people, you can put this in and say all phone lines will come from a hosted solution," said Gary Garlinger, technical support engineer at Black Box Network Services, a Nortel distribution partner. "A larger business can take their phone system on floor 3 and expand to floor 27," by just putting the gateway in the newly built-out site, he said.

"It's a versatile little box with a lot of potential," Garlinger added.

That Nortel released this new UC product just as executives are working to unload the Metro Ethernet Networks division to save money is not all that surprising. Nortel has been trying for a few years now to make the case that it is more an enterprise applications company than a legacy networking provider. So far, channel partners say they plan to work with Nortel's enterprise strategy, and they are sure things will work themselves out.

Still, Nortel has heated competition in the UC market, especially the SMB market. Almost all of its competitors have products that compete with Nortel's portfolio in some way. But partners are loyal. Hall and Garlinger said no competitor has hybrid IP products that are as good as the BCM 450 and the BSG 8 for this particular space in the market.

Partners who already specialize in UC and the SMB market with Nortel won't have to get further training to offer the BCM 450 and the BSG 8.

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