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Nortel Competitive Assessment Offer Capabilities in the New ASP Space

Nortel Competitive Assessment Offer Capabilities in the New ASP Space. Bill Terrill SPN Market Insights - CI March 3, 2000. Network Services. Applications. Integration. Support. Applications Services (ASP). Enterprise Customer. Managed App. Svcs. Initiative Messaging eCommerce

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Nortel Competitive Assessment Offer Capabilities in the New ASP Space

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  1. Nortel Competitive Assessment Offer Capabilities in the New ASP Space Bill Terrill SPN Market Insights - CI March 3, 2000

  2. Network Services Applications Integration Support Applications Services (ASP) Enterprise Customer • Managed App. • Svcs. Initiative • Messaging • eCommerce • Workplace eCommerce • Global Prof. Svcs. • Internet infra- structure services • Network-enabled transformations • Service-enabled solutions • e-customer care • Managed-network services • Data Center Support • OSSs • Billing • Product Marketing • Core IP/ATM ntwks • VoIP solutions • Wireless ntwks • IP VPNs • Optical MANs Hosting Services Marketing & Sales • Preside Service-Ware • Service Control • Customer Care & Billing • Service Activation • Policy Services • Service Assurance • Sales Channels • Nortel 15,000 global VARs • SAFECO 17,000 agents Not ASP - Specific ASP - Dedicated Labor and Software Development Resources ASP - Specific Supply Chain & Channel Resources Nortel’s ASP Supply Chain Nortel is playing across all supply chain spaces to provide a tightly integrated end-to-end solution...

  3. Network Services • Nortel’s Network Services delivery architecture and network products provide: • End-to-end infrastructure, security, QoS and INM • Set up of optical, ATM, FR, and MPLS connections • A complete view of the network to activate new services • Accounting for any services rendered so SPs can bill on usage, QoS parameters, etc. • High-speed Internet access using Promatory’s IMAS DSL platform (acquired 1/00) provides broadband capabilities to residential users • Optera optical switches will be the basis for a new high-performance data center strategy • Contivity extranet switch-router is best selling IP VPN product that provides secure shared infrastructure • Nortel’s Service Provider customers are wooing ASPs • AT&T has made the strongest pitch yet to be ASPs’ infrastructure with its Ecosystem network services platform • provide co-marketing • distribution for ASPs • professional services to develop further applications • Other major SPs, like Level 3, Frontier-Global Crossing and Qwest, • already provide data centers and management functions for ASPs • have their own ASP activities underway

  4. Hosting Services: Preside Service-Ware Preside architecture Applications Hosted Applications - Unified Messaging - Ecommerce Service Control Service Creation Environment and 3rd party Management Systems Customer Care and Billing Service Activation Serviceware Policy Services APIs Service Assurance Infrastructure Data - Optical - Telephony - Wireless • Preside comprises five functional integrated service-enabling software applications called Serviceware • Enables fast, easy service creation, deployment and management • Delivers user policies to enable service differentiation (I.e. Silver, Gold, Platinum) • Allows SPs to rapidly and easily create high-value, high-margin services • Allows 3rd party programmers and ISVs to use open APIs for specifying networking qualities like QoS and bandwidth parameters • APIs to ease ISV development of network aware applications • APIs are currently in beta-testing with ISVs; expects results in few months

  5. Hosting Services: Preside Offer Enablers • Preside offer is enabled by several management and service-related acquisitions and alliances: • Bay Networks: acquiredin 8/98 for $9B for Optivity enterprise data management capabilities • Novell: strategic agreement announced 11/98 to develop and market network services that integrate Novell Directory Services (NDS) with Bay’s Optivity Policy Services policy management application suite (delivers on previous 10/97 Novell/Bay agreement) • Shasta Networks: acquired in 4/99 for $340M for service-enabling gateways and subscriber policy management systems at the “subscriber-edge” of IP networks that manage IP services across platforms • X-CEL Communications: acquired in 5/99 for carrier-grade SLA and network performance management solutions to be integrated into Nortel’s Integrated Network Mgmt (INM) offer • Clarify: $2.1 billion acquisition announced 10/99 for eFrontOffice suite of CRM software applications which will be integrated with SP backbone infrastructure through OSSs and network management systems • Sun-Netscape Alliance: announced 1/00 to develop a new directory-enabled solution that will enable ASPs to offer customized and packaged solution sets • Talarian: announced strategic relationship in 2/00 to test, develop and market next generation of real-time eBusiness infrastructure and integrate Talarian’s SmartSockets software into Nortel’s solution

  6. Hosting Services: Preside Offer Marketing Nortel Emphasizes the Internet “Value Sell” Interactive Multimedia Applications “The Networked Economy” Managed IP-VPN Services for Applications “The Business Class Internet” Value Margin Managed Network Services & VPNs Extranet, Internet, Intranet …Mean New Revenues Managed Bandwidth X.25, SMDS, ATM, FR, IP Traditional Voice, POTS Revenue Potential Portal Services Call Centers ERP Hosted Applications New Services... Advanced Services Intranets Extranets VPDNs Sophistication of Service Value Added Services Managed Bandwidth Established Services

  7. Applications: Managed Applications Services Initiative • Nortel’s Managed Applications Services Initiative for ASPs • Announced 12/99 a string of services aimed at kick-starting the sale and rental of software over the Internet • Working with Hewlett-Packard and ISVs • Integrating solutions that allow ASPs to deliver and maintain software solutions for small and medium sized businesses • Will help Applications Service Providers (ASPs) to certify, deliver and support applications • Solutions scheduled for 1Q00 include: • Managed Messaging --- uses HP Smart Internet Messaging suite coupled with Software.com’s Intermail as the managed messaging application • Managed eCommerce --- provides complete e-commerce solutions leveraging Intershop’s web storefront creation capabilities • Managed Workplace eCommerce --- delivers Concur’s suite of web-based, workplace e-commerce solutions including T&E management, HR self-service, and corporate procurement • Announced strategic alliance with SAFECO in 2/00 • First global leveraged buying eCommerce trading network for SMB market • Concur Business Advantage connects users to suppliers over Internet • Made $35 million equity investment in Concur • Microsoft to invest marketing and R&D resources to optimize solution for Windows 2000

  8. Integration, Support, Marketing & Sales: Nortel’s Global Professional Services • Nortel launched its Global Professional Services organization • Announced 12/99 the appointment of Kannankote Srikanth as president (former VP&GM of Compaq’s professional services division) • Will be global in scope and will target both carriers and enterprises • Consolidated multiple professional services organizations within Nortel • Division is augmented by Nortel’s channel and systems integrator partners which can also provide a SMB sales channel to ASPs • Mission to provide more customer value in building the infrastructure solution • Offers will fall into five groups • Internet Infrastructure Services: addressing the design and building of optical, access, and wireless network infrastructure • Network - Enabled Transformations: providing for network convergence and migration from circuit-switched to IP networks • Service - Enabled Solutions: such as outsourcing, operations support systems integration and architecture and solutions consulting • e-Customer Care: supporting new e-business applications division placing strong emphasis on CRM and call-center software • Managed - Network Services: address integration and data center needs of ASPs • Acquired Dimension Enterprises Inc. (DEI) for $65 million in 2/00 • Improve ASP offers with best-in class Internet data center capabilities • Specializes in business strategy consulting, Internet security, IP networking, enterprise application integration, and data center implementation

  9. Nortel’s Key ASP Events Oct. 27, 1999 - Introduces Preside product portfolio aimed at ASPs Capabilities that enable the creation and delivery of profitable services via the Internet. Dec. 13, 1999 - Announced Managed Applications Services Initiative for ASPs String of services aimed at kick-starting the sale and rental of software over the Internet working with H-P and ISVs to certify, deliver, and support applications, and also created an organization specifically addressing the needs of ASPs Dec. 16, 1999 - Appointed President of Professional Services Responsibility for global professional services strategy and organization to provide customers with comprehensive services in network and systems integration, network and applications outsourcing, as well as architecture and solutions consulting Jan. 10, 2000 - Announced joint effort with Sun-Netscape Alliance Develop a new directory-enabled solution that will help enable ASPs to offer customized and packaged solution sets Jan. 30, 2000 - Selected as solutions integrator for EINSTEINet, facilities-based ASP Includes high-speed Internet access, Optical Internet, Internet Data Center infrastructure, and application software and service capabilities worth $200 million over three years Feb. 8, 2000 - Announced Talarian agreement for real-time eBusiness Infrastructure Combine Talarian’s SmartSockets software and Nortel’s high-performance Internet solutions Feb. 9, 2000 - Acquired DEI to offer ASPs Internet Data Centers Help Nortel design and engineer data centers which house eBusiness content Feb. 23, 2000 - Concur, Nortel, SAFECO announce strategic alliance Create the first global leveraged buying eCommerce trading network application for the SMB market

  10. Key Conclusions, Issues and Take-Aways • Nortel understands the hot buttons in the ASP business case and is addressing them in in its solutions • QoS for applications on a per user basis making for an application aware infrastructure • Provide a quick market entry strategy for IP services to include provisioning and integration • Robust computing platforms to support multi-tenant services • Open application platforms that facilitate ease of development for ISVs • Created an organization specifically addressing ASPs • Richard Caruso is president, Applications Service Providers Market Segment • Mission is to focus all Nortel resources for success in the ASP market segment • Focused and accountable organization could build a sustainable advantage in the ASP market space • Nortel’s strategy is to serve as an end-to-end solutions integrator • Will use alliances and minor equity investments more and more to optimize capabilities to address a specific market segment (e.g., ASPs) • Moving away from being a telecom manufacturer and marketer • Will follow strategy to increase ability to focus on customer requirements for software technology and high-value network solutions

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