Nortel Networks creates new optical business unit to accelerate development of Internet-based components

Nortel Networks Corp's integration of its formidable optical components business lines into a single corporate unit is the culmination of a long term push into the field which has helped transform the Canadian-based conglomerate into a major global telecommunications force. Last week's announcement of the creation of a High Performance Optical Component Solutions unit also underscores the influence of the company's 1,000-strong Disruptive Network Technologies group, which identifies business-disruptive technologies through its interaction with universities, research institutes and laboratories.

The move is also aimed at giving the Brampton ON-based firm the horizontal alignment required to integrate its rapidly expanding in-house optical expertise with many of the optical-based acquisitions it has made in recent months. The unit pulls together more than 6,000 employers in Canada, the US and the UK as it focuses on its role within Nortel's unified networks strategy comprising optical Internet, Internet telephony, Internet services and wireless Internet. It will also incorporate expertise resident within several recent acquisitions, including Xros, a provider of fully photonic switching solutions and CoreTek, a developer of tunable lasers and optical components.

Nortel's existing optical components group will be combined with other in-house areas of expertise, including high-speed modules and integrated circuit design and development. Together the new unit will be responsible for designing and developing optical components such as lasers, high-bandwidth receivers, and a wide variety of microelectronic components, including transmit and receive modules and semiconductor chips.

The new team's goal is to integrate multiple functions onto a single chip or module - a challenge facing all researchers working in the photonics area - and design optical components that increase the capacity and performance of optical Internet systems. Included in the team are technologists developing new manufacturing and processing techniques and exploring the use of new semiconductor materials, with plans to triple production capabilities before year-end.

By banking on the future growth of the high-performance Internet, Nortel has launched a four-pronged strategy of aggressive acquisitions, strategic alliances, intellectual investments and cutting-edge laboratories. As the Internet intrudes into virtually every sector of the economy, it has become a dominant focus of Nortel's massive R&D investment. This year, 85% of expenditures will be devoted to Internet Protocol-based solutions, up from 65% in 1998. The company now employs 26,000 engineers out of a workforce of more than 70,000 and has active partnerships with more than 130 academic institutions worldwide.

The Disruptive Network Technologies group is led by David Mann, VP technology, service provider and carrier solutions. By crossing all business divisions within the corporation, it operates as the key strategic intelligence unit, working at diffusing the technologies of other companies and planning counterattacks to ensure market dominance in selected areas. At a recent technology forum held by the Innovation Management Association of Canada, Mann said his unit's purpose is to increase the velocity to market.

"Technological innovation is interesting in itself but it's even more so when applied to the marketplace. We are the accelerator," he said.

Mann's group wields a large budget to acquire or develop the technologies required for Nortel to move forward. Nortel has acquired 13 firms since 1997, ranging from the mammoth Bay Networks to small, technology-intensive firms with little or no revenue stream. He says one of the challenges of acquiring firms with disparate corporate cultures is to lock in key employees through incentives, positions of authority and a stimulating work environment.

The High Performance Optical Component Solutions unit will be headed up by Barbara Callaghan, most recently VP and GM of Nortel's Microelectronics Group. Callaghan joined Nortel in 1981 and held a variety of executive positions including Assistant VP of the Multimedia Networks Division.

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