Asp services

DOWNLOAD; Spreading its wings: Nortel dives into ASP space, acquires Qtera - Nortel Networks joins with HP, Software.com and other companies to offer services

Nortel Networks made two strategic plays last week, following a move into the application service provider space with the acquisition of Qtera.

Unveiling its Managed Application Services Initiative, Nortel will join with Hewlett-Packard, Concur Technologies, Intershop and Software.com to deliver applications to ASPs that target small and medium-sized businesses.

"We're acting as the overall solution integrator," said Richard Caruso, president of Nortel's ASP market segment, which is part of its service provider and carrier group.

Under the initiative, Nortel will feature Internet-based applications designed to accelerate users into e-business, Caruso said. A managed messaging application will integrate capabilities from HP, Software.com and Nortel; a managed e-commerce solution from Intershop and Nortel will enable Web storefront creation; and a managed workplace e-commerce portal from Concur will offer a suite of solutions such as travel and expense management and human resources self-service.

"We are transforming today's information-delivery Internet into a trusted application-delivery network," Caruso said. "We intend to make the Internet profitable for ASPs and all service providers."

The initiative gives ASPs a single point of accountability, faster time to revenue, tested interoperability and the ability to offer differentiated services, he said. "End users receive high performance and reliable services and a more interactive experience as well as productivity gain and reduced cost."

With its move into the ASP space, Nortel is leveraging some of its recent acquisitions, said Christin Flynn, an analyst with The Yankee Group. Flynn cited the example of the company's merger with Shasta Networks earlier this year, after which Nortel integrated Shasta's subscriber management system into its data equipment line. "[Nortel] made acquisitions and then used some of the expertise that lay within those to build a story around them," she said.

Nortel is ahead of the game with the timing of its entry into the application services market, but it may have to overcome the perception that it's not an applications provider, Flynn said. "They will play to a different market. That's why they've established a separate sales team to push this, and that's what they needed to do to overcome some of the barriers," she said. The strong relationships Nortel has established with HP and the other partners also will come in handy, she added.

In a separate announcement last week, Nortel revealed its anticipated plans to acquire optical equipment start-up Qtera. Nortel agreed to pay $3.25 billion in stock for the company, which has yet to release a product for general availability.

Similar to Nortel's purchases of companies such as Cambrian Systems and Shasta, some of the $3.25 billion price tag is contingent upon incentives. "They will have [financial] incentives to meet deadlines, roll out product and secure customers," said Anil Khatod, president of optical Internet for Nortel.

But Qtera already is on the right track, having recently secured a spot in Qwest Communications' all-optical test bed. "This is really a great opportunity for us because it gives us the ability to extend our optical platform even further," Khatod said.That extension of the platform involves the expanded reach of optical transmissions in Qtera's case, as it is supposed to eliminate the need for up to 75% of electronic regenerations.

"It cuts the equipment required by the network and lowers the cost of bandwidth by 40% to 50%," Khatod said.