Timing Doesn’t Favor NSN Bid for Nortel MEN Assets

Now that the $521-million stalking-horse bid from Ciena has been approved and the date has been set for the auction of Nortel’s Metropolitan Ethernet Networks (MEN) assets, attention has turned to which companies might challenge Ciena for the prize.

The auction will take place November 13, and vendors have until November 9 to tender counterbids.

In my view, there still is a strong possibility that Ciena’s bid will go unopposed. Of the likeliest contenders, Ericsson has the means, but probably not the inclination; Alcatel-Lucent’s CEO seems averse to growth by acquisition; Fujitsu is seen as a dark-horse candidate by some; and joint-venture Nokia Siemens Networks (NSN) has become a seemingly bottomless sinkhole for goodwill writedowns by its two owners, Nokia and Siemens AG.

Given the vast impairment charges NSN’s parent companies have incurred, I doubt either parent feels particularly inclined to ante up to the auction table. In all likelihood, NSN’s parent companies will take stock (literally and figuratively), try to staunch the joint venture’s hemorrhaging losses, and then decide whether and how to move forward. Now probably is not the time for NSN to ponder an acquisitive expenditure of more than half-a-billion dollars — perhaps more if Ciena raises the stakes.

Ericsson could get involved, and Alcatel-Lucent might reverse course, but one could make a persuasive and plausible case that Ciena will be the only company with a bid filed by November 9.

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Confusion in Business Press and at Microsoft

I am busy on multiple fronts today, so I don’t have much time for blog posts, but I wanted to provide a brief commentary on yesterday’s New York Times feature article on Microsoft.

As I read through the piece, two things struck me.

First, I noticed that the writer, Ashlee Vance, and many of those quoted in the piece seem to mistakenly believe that, as we move into the supposed era of cloud computing, what happens in consumer computing will always and necessarily infect and come to dominate enterprise computing. That’s just wrong. The two worlds remain very different, with very different desires, imperatives, motivations, and requirements.

To deliver great consumer solutions, you need to understand consumers. To serve that market, you need to focus resolutely on it. You need to cultivate and develop content partnerships, you need to have the right product-design aesthetics, you need to have the marketing prowess, you need to have an intuitive feel for the zeitgeist.

Similarly, the enterprise market requires an equal level of commitment and dedication. Whereas a consumer wants something that’s sexy and cool, an enterprise — an abstract composite entity that exists to make money — is looking for products and solutions that are cost–effective, durable, reliable, scalable, and offer compelling return on investment (ROI).

Consumers just don’t think that way. Businesses espouse products and technologies that can be standardized across the enterprise, because the cost of supporting multiple devices and platforms is prohibitive. Businesses are not structured like democracies, and they’re not built to indulge individual desires (except perhaps at the board and CEO levels). Decisions on products and technologies are centralized and hierarchical, based on business criteria, not on personal whim.

Psychologically, in case I haven’t made the point crystal clear, the buyers in the two markets are very different.

So, why do mainstream journalists conflate consumer and enterprise markets so often? My guess is that it’s because so few of them are familiar with or understand the enterprise mindset.

All of us are consumers, but not all of us have been tasked with enterprise IT-buying decisions. In the enterprise, technology buying decisions must support business objectives. If they don’t, well, jobs and livelihoods are at risk. You can’t afford to take a flier on a cloud-computing gambit unless you’re damn sure that the cloud is available, reliable, and secure.

When you’re a consumer walking into Best Buy, you’re not thinking, “Well, if I buy the wrong mobile handset, I’ll lose my job.” Instead, you’ll buy the handset that you like the most. It’s a very different set of circumstances, and I’m not sure business journalists always appreciate that fact.

The other thing that struck me, somewhat related to the first point, is that, increasingly, Microsoft struggles to make that very same distinction. It’s disturbing, but I get the distinct impression — and not just from the New York Times article — that Microsoft no longer knows its place in the computing constellation. It’s distractedly chasing all sorts of bright, shiny objects around the computing universe. It’s letting others — neither its customers nor its own strategists — set its agenda.

In some respects, Microsoft looks like a bigger version of Dell, spread across too many markets, placing too many muddle-headed bets, and not putting enough of its resources into areas where it has a chance to dominate. By dabbling in areas where it can’t win — where it doesn’t have the composition or constitution to excel — and by not doing everything in its power to fully tap markets where it has strong mandates and powerful value propositions, Microsoft is diluting its value rather than extending it.

An example is mobile computing. Now, more than ever, we can see that Windows Mobile is a spent force. It’s done.

Rather than throwing good money after bad, Microsoft should think about how it can strengthen its enterprise grip by ensuring that it supports — with its server software, software services, desktop integration, you name it — the mobile devices and platforms likely to infiltrate the enterprise space. The company should ensure that Microsoft servers, applications, and services work best with any of devices and mobile operating systems that have a meaningful profile in the enterprise.

Microsoft Mobile is losing badly, but that doesn’t mean Microsoft needs to allow mobile devices to become Trojan Horses that weaken its enterprise grip.

With the Xbox family as the one potential exception — and the jury on that one hasn’t returned a definitive verdict — Microsoft just doesn’t get the consumer space. The execrable ads for Windows 7 house parties should prove that case beyond reasonable doubt.

It’s time for Microsoft to reapportion its resources to areas where the company can win rather than spin.