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Nortel dumps WiMax (News Roundup)

Additional headlines: Growing Gray market threatens VARs; Dell ponders smartphones -- again; HP urges partners to go ProCurve -- not Cisco.

In a tough economy, the gray market threatens VARs

Tight budgets are forcing businesses to turn to the gray market for less-expensive used or counterfeit technology, causing potential harm to VARs that are playing by the rules, reported last week. According to research from KPMG, more than 38% of resellers have received offers to sell products from gray marketers, and 66% of those companies actually purchase from the gray market. Of that group, 25% say gray-market equipment makes up between 11% and 30% of their annual purchases. VARs say their customers are much more likely to look into gray market equipment now that their budgets have been cut. But for VARs, gray market deals drive down margins, and if they play by the rules, it threatens their ability to sell into some accounts.

Nortel dumps WiMax business in first restructuring step

Nortel Networks will exit the WiMax wireless technology business as part of its financial restructuring. The move ends Nortel's agreement to sell WiMax access products from Israeli wireless company Alvarion Ltd., Reuters reported last week. Nortel was a major supporter of WiMax technology, which is struggling against LTE to catch hold as the market standard. A number of companies, including Google and Intel, have backed off their investments in Clearwire, the company building out a nationwide WiMax network. For Nortel, the move was about slashing expenses. "We are taking rapid action to narrow our strategic focus to areas where we can derive maximum return on investment," Richard Lowe, president of Nortel's carrier networks business, said in a statement. Alvarion cut its outlook upon hearing the news, Barron's reported. Alvarion had expected to receive $2.4 million from the sale of products to Nortel and now sees revenue for the quarter at $70 million, the very bottom of its predicted range of $70 million to $78 million.

Dell needs to be smarter on its second smartphone attempt

Rumors are abroad that Dell may release a smartphone to rival Research in Motion's (RIM) BlackBerry and Apple's iPhone, The New York Times reported last week. But sources predict that Dell will hold off until it finds a killer application to rival BlackBerry's super email capabilities and iPod's touch-screen. Dell has failed once before at the mobile device game, retiring its troubled Axim in 2007. In the meantime, sources say Dell has been toying with various phone prototypes for months and has evaluated both Google's Android and Microsoft's Windows Mobile operating systems. One rumor is that Dell will create a device slated for a 2010 release that would include the company's Zing music software originally intended for its portable music player line, which also didn't fare well in the market.

Cisco expands Nexus line with virtualization in mind

Cisco further deepened its data center strategy last week, expanding its Nexus line with two new virtualization-ready switches, reported last week. The Nexus 5010 consolidates 28 ports and 10 Gigabit Ethernet (GbE) into a 1U form factor. The Nexus 7018 is an 18-slot chassis that can offer up to 768 GbE or 512 10 GbE port density, plus 48 ports of 1 Gb Fiber. Cisco also released the Nexus 2000 Fabric Extender, a top-of-rack device that links to the end-of-row servers, acting as an extension of those devices. The extension of the switching fabric is important because it more easily enables groups of physical host devices with virtual servers that demand more bandwidth.

HP rebate program urges partners to go ProCurve -- not Cisco

HP is pushing its partners to dump Cisco and go ProCurve with a new rebate program announced last week that rewards them for selling consultative services and value-adds on ProCurve equipment. Until recently, many HP VARs partnered with Cisco for their customer's networking needs. Now HP ProCurve has released data center switches and applications, and the company has encouraged partners to go end-to-end with in-house product. To that end, the program, Business Class Consultant, offers back-end rebates to HP preferred and elite partners when they work with ProCurve equipment, as well as with standard and business-class storage offerings. HP also launched a new partner portal tool that sits on the desktop, giving partners click-through access to the most commonly visited sites within the portal.

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