Project Ottawa

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Project Ottawa
From MOU to FCS in 90 Days
Implementation Framework
Gary Kunis CTO
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Overview
Nortel is going to become a Major Player in the
High Margin Router Business

• Nortel will create a Canadian Based JV with
  Huawei to develop a Router Portfolio for Nortel
• Nortel will expedite signing an MOU with Huawei
• Nortel will embark on a 90 day program to bring
  product set to market
• Nortel will bring to market a Router Portfolio
  that will match Ciscos portfolio in breadth and
  depth of platforms
• Nortels products will be priced at 30 below
  Cisco with comparable performance and features

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Goals
From MOU to FCS in 90 Days

• Nortels router business will fuel strong Nortel
  incremental revenue growth
• High Margin Router Sales
• Strong leverage for LAN Switching and VO IP Sales
• Strong leverage for SP Service Edge and Optical
  Sales
• Nortel / Huawei JV becomes the Number 2 vendor
  in the router market with 24 months
• Nortel becomes the Number 1 vendor in the low end
  access router market within 24 months.
• Capture SP CPE resale market
• Nortel / Huawei JV becomes the alternative to
  Cisco to all resellers in all markets except
  China

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Caveats
From MOU to FCS in 90 Days

• Nortel has expedited signing an MOU with Huawei
• The Go-To-Market work starts at the signing of
  the MOU by all cross-functional groups.
• Nortel cross-functional teams will implement a
  predefined plan
• Working on a known set of activities
• All activities are performed in parallel.

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Proposed Canadian JV
Spunky Canadian takes on Cisco the Monopolist

• Allows Nortel to Position the Product Line as
  Canadian
• Need to emphasis Nortels position as the JV
  Driver
• Need to overcome issue of bias against Chinese
  products
• Additional Benefits
• Allows for strong messaging to Canadian Market
  about Nortel
• Subtle advantages in European and Asian Markets
  vs Cisco
• Access to the US Market thru NAFTA assured
• Better Positioning
• JV as a Spunky Canadian Beaver and not a
  predatory Chinese Tiger
• Nortelization will allow us to position the
  products to be as Canadian as an Egg Salad
  Sandwich

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Creating the JV

• Primary Players Bus Dev, Finance, Legal
• Responsible for finalizing JV structure,
  ownership, etc.
• JV will be located in North America
• Any Asian location is a non-starter
• Canada is preferred choice of Nortel and Huawei
• Access to the US Market has to be assured
• Issue of Huawei patent violations
• Cross license agreement Huawei has agreed that
  payments go into JV as part of Nortels
  contribution

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JV Market Focus

• United States
• JV has an exclusive in product distribution /
  support within the SP space
• JV will compete against the 3COM JV in the
  Enterprise.
• Canada, Japan, Australia, India
• JV has an exclusive in product distribution /
  support in all market segments
• Western Europe
• JV has an exclusive in product distribution /
  support within the SP space
• JV will compete against 3COM JV in the Enterprise
• Russia
• TBD Further discussions between Nortel and
  Huawei

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Market Focus (2)

• Eastern Europe
• JV has an exclusive in product distribution /
  support within the SP
• JV will compete against 3COM JV in the Enterprise
• South America
• JV has an exclusive in product distribution /
  support within the SP space
• JV will compete against the 3COM JV in the
  Enterprise.
• China JV will not compete in the China Market
• Asia
• TBD On a per country basis by Huawei and Nortel
• Middle East and Africa
• JV has an exclusive in product distribution /
  support in all market segments

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High Level View of Cross-Functional Activity

• Product Line Management
• Naming / Pricing / Packaging
• Documentation
• Product Development
• Nortelization of Router Platforms
• Business Development
• Managing overall Huawei relationship
• Marketing
• Go-To-Market Messaging and Strategy
• Market Collateral

Activities begins 06/15/05
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High Level View of Cross-Functional (2)

• Sales / Distribution
• Focus Forecast / Goals / Programs
• Compensation, Positioning, Training
• Channels Creation and Management
• Implementing migration of installed Bay base
• Customer Service
• Developing required Service Products
• Learning to work with Huawei Support
  infrastructure
• Legal
• Finalizing JV
• Signing off on settlement of Huawei Patent
  Issues

Activities begins 06/20/05
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New Product Platforms

• High End Router Platforms based upon the Huawei
  NEXXE hardware platforms
• Modular Mid Range Platforms based upon the Huawei
  AR46 hardware platforms
• Modular Low End Platforms based upon the Huawei
  AR28 hardware platforms
• Fixed configuration Low End platforms based upon
  the AR18 hardware platforms
• Access Concentrators based upon the Huawei BRAS
  5200 hardware platforms

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Product Development Activities

• In order to meet the 90 day FCS target, initial
  product development will be minimal
• Nortels initial development focus will be to
• Develop a Nortel CLI for all platforms
• Develop a Nortelized MIB structure for all
  platforms
• Network management Integration
• The platforms will have to managed by all Nortel
  Management platforms
• Product Testing
• Performance and functionality (Ottawa and
  Billerica)

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Product Line Management Activities

• Create Product Nomenclature
• Router Product Family Naming and Numbering
• Product pricing and SKUs
• Create all Product Marketing Collateral
• Massaging Huaweis collateral
• Nortel specific collateral (white papers, etc.)
• Packaging
• Product labeling / Coloring
• Creation of Shipping Packages
• Nortelization of Huawei documentation
• Huawei will provide active assistance
• Product Testing (with Product Development)
• Identification of worldwide Bay / Wellfleet
  installed base
• Identify all potential platforms
• Create Migration Program

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Required Service Products

• Nortel will create a warranty for each of the
  router product platforms
• Nortel will create 3 distinct maintenance
  packages for the new router portfolio
• Direct maintenance product for direct sales to
  end users
• Partner maintenance product to support partners
  who are reselling the product
• Shrink wrapped maintenance for two tier
  distribution
• Adoption of standard PDIO Customer Service
  products for all router products
• For SP and Enterprise
• Integration into / coordination with Huaweis
  support infrastructure

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Marketing and Sales

• Messaging / Marketing Strategy
• Collateral created with Huawei
• Programs (including Channel Programs)
• Direct Sales and Channels Distribution Roll Out
• Forecast and Goals with Huawei
• Incentives and Compensation
• Creating a channel distribution capability within
  90 Days
• Training and Positioning
• Focus Programs
• Bay Router Migration Program
• Formal program with compensation incentives

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Creation of Nortel Presence at Huawei

• Creation of on site presence at Huawei
• To be implemented by Product Management and
  Customer Service with 90 days
• Participation of HR
• Nortel Engineering Development team
• Nortel Product Management Liaison team
• Nortel Tier 3 Customer Service Team
• personnel integrated with Huawei Tier 3 Customer
  Support

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Summary
Make Nortel the Number 2 Router Vendor

• The Canadian Router JV provides Nortel with its
  best opportunity for significant high margin
  incremental revenue
• A strong Router business will also
• Leverage LAN Switch and Vo IP opportunities in
  the Enterprise market
• Leverage Services Edge, Optical, and Vo IP
  opportunities in the SP market
• Persuade potential Channel partners to focus on
  Nortel as a credible partner
• We are time-constrained The 90 Day plan is set
  in Stone
• This is a cross-functional exercise All groups
  must execute to perfection
• All activities will be performed in parallel
• Need to minimize the number of gating activities