Once it was one of Canada’s biggest employers and a stock market darling, just a couple of days ago it filed for Chapter 11 bankruptcy protection in the United States.  Nortel has been struggling for years now, facing increasing competition from companies such as Alcatel-Lucent and Ericsson.  While its stock was once worth more than C$1100, it now plumetted to C$0.15

The current financial crisis obviously does its target market no good, with companies canceling or delaying investments in phone systems. But is this a mere indication of the economic malaise, or is there more going on?  Over the past few years we’ve seen the uprise of open source and software based phone systems introduced by lean and mean companies with a much lower cost burden.

Of course these smaller companies are not taking big chunks out of Nortel’s revenue, but they are definitely eating bits and pieces away from it.  This, combined with lower revenue and high fixed costs may very well contribute to the demise of not only Nortel but other traditional phone system manufacturers.  I’m sure 2009 will tell if Nortel is going to be the only PBX maker who falls victim to the economic crisis.

This entry was posted on Monday, January 19th, 2009 at 13:04 CET and is filed under Industry. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.