In November 1999, Nortel announced a software licensing mechanism for the Internet Protocol. Called Open IP Environment, the idea was to license the stack to organizations building competitive product to Cisco. At the heart of the matter was a crack software engineering team that had a plan to build modules for security, mobility and other capabilities as the market developed.
The basic idea was to strip Cisco of any sustainable technical advantage in IP, and to give the 'crown jewels' as it were to as many challengers as we could find.
It was also coupled with a 50% cut in access router pricing.
What was the sustained effect? Yes, it seemed to have reduced the costs of the router product category, but the Old – New World analogy didn't work for long. It may have had something
This was no ordinary competitive move. At the end of 1999, Nortel had mini-market share in access routers, the product was profitable at the new low prices and we new that to win, we had to apply pricing pressure on the other guy. So, in a dramatic announcement the next day, we cut the price by 50%.
The positioning – Old World routers vs New World routers set a new benchmark in the space but the subsequent problems in Nortel Enterprise made this message unsustainable, particularly since there were no new products to followup the announcement.
Remember the sound after Y2K?
There were no new products that hadn't already been announced. There were no new features that hadn't already been announced. There were no new deals that hadn't already been announced. There were few new sales that hadn't already been booked. The good times were over.
That was when I was promoted to VP Marketing, removing lots of people from the unit (we had to compress a few layers of Marketing leadership into one), and reorganize to slow investment. It hurt, alot.
In hindsight, we should have launched a campaign around the New World story. That was the kernel of something clever that could have worked to repositioned the company more elegantly in the new market realities. Instead, the whole marketplace went quiet, as customers chewed on their purchases from 1999, and our revenues fell for the first two quarters (maybe more).
