Big Vendors Adjust to a Different World

Carl Weinschenk

People accept the fact that communications networks of the future -- and, increasingly, the present -- are and will be everywhere. These networks feature multiple links between people and machines, stationary and mobile connectivity, a great deal of innate intelligence and oodles of bandwidth.


The extent of the changes to the landscape make it understandable that press reports of big companies trying to morph their businesses are common. Last week at its Technology Investors Day, Reuters reported that Nortel -- which also is attempting to rebound from legal troubles -- outlined significant changes in how it will divvy up its $1.7 billion annual R&D budget.


By year's end, emerging technology initiatives will be the recipient of 20 percent of the R&D budget, versus 10 percent now. Spending on current technology, the Reuters story says, will rise from 35 percent to 60 percent -- while the portion of the budget spent on legacy equipment is cut from 55 percent to 20 percent.


The big picture was explained at the festivities with analysts. But how will this changing world manifest itself? A good hint was provided this week, as Nortel and Polycom announced a video conferencing and telepresence partnership. This isn't a huge industry segment -- which may just be the point. As integrated and ubiquitous infrastructures arise, smaller niche products and services can more easily slide in, provide services and produce revenue.


Folks from Polycom and Nortel working the videoconferencing/telepresence beat likely will run into Cisco, which is another huge vendor trying to adjust to this new world. This BusinessWeek piece details the company's push toward the consumer business.


Cisco actually has been moving in this direction for a long time. The most obvious steps were the company's acquisitions of consumer wireless vendor Linksys and set-top box maker Scientific-Atlanta in 2003 and 2005, respectively. The Business Week story suggests these and other deals were precursors of an ambitious effort to more deeply move into the consumer world.

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