Ex-Bay Networks CEO: Nortel's Enterprise Group Could Do Well on Its Own

Nortel Enterprise Chief Wants to Bring Back Bay Networks
FAQ: What's Going on with Nortel?

"It had a good name," he says of the company that he sold to Nortel in 1998 for $9.1 billion. "It has some latent value."

The idea that Bay Networks might be given new life popped out this week from John McHugh, Nortel's vice president and general manager of Enterprise Data Solutions, who noted that Nortel still owns the Bay name, which is fondly remembered and respected.

House notes that given the bankruptcy it is going through, Nortel isn't the best name to carry around right now. The alternative would be to come up with a new name, but the simplicity of Bay is appealing. "It's not a strange combination of letters and it's easier to remember than Avaya," House says.

In its day Bay Networks had good technology and blue-chip customers, and those are assets House would bring into play again. The technology would have to stand on its own merits, and the business would have to convince potential customers that it is viable as a company, he says.

It would also take sharp messaging that clearly and simply defines what the company has to offer, House says, and he would direct it at the high-end enterprises such as banks and large corporations. "If I were the CEO that's where I would be aiming," he says.

While the landscape has changed since House left Nortel in 1999, he thinks it would be possible for an independent vendor based on Nortel's enterprise data group to do well. "Historically Bay had a technology advantage over Cisco, which had a sales advantage," he says.

Bay might have done well had it remained independent in 1998, but that was not possible, House says. Then, carriers were rapidly adopting IP and Ethernet technology. That required the traditional carrier-equipment vendors to team up with enterprise vendors in order to supply IP and Ethernet. But in 1998, Cisco declared that these traditional carrier suppliers such as Nortel and Lucent were its competitors.

House leapt on the concept to woo vendors of carrier gear to buy from Bay and push it through carrier channels. His message: "We're your friend. How can we help you fight Cisco?"

The downside was that these potential partners worried that if one of their competitors bought Bay, they would be left in the lurch. That meant one of them had to buy Bay to get its technology, and that one was Nortel. House says the price was too good to turn down.