"Vision.That is what defines Nortel's history.This company is a global powerhouse and one of the select few that are redefining the way that information is shared. If you want to read a great business story, look no further.' -Roger G. Ackerman, Chairman and CEO, Corning Inc. How lrtnovation and V£s£on Created a Network Giant $27.95 USA/ $34.95 CAN Nortel Networks is one of the companies at the heart of the Internet revolution. One of the biggest stories now unfolding is the fierce rivalry of three tit ans to construct and expand the networks of the future. Nortel, Cisco, and Lucent are all racing to meet the exponential growth in Internet use and to satisfy the insatiable demand for bandwidth to handle the tidal wave of Internet traffic. The company that got its start in 1895 as the manufactur­ ing arm of Bell Telephone of Canada-just shortly after the invention of the telephone itself-has become a world leader in the hugely competitive telecommunications industry. In the Internet age, as voice and data converge, Nortel has transformed itself from a hardware manufacturer into a new­ economy powerhouse built more on software, wireless tech­ nology, and fiber optics. No company over 100 years old is without its ups and downs. And Nortel is no exception. Nortel Networks: How Innovation and Vision Created a Network Giant recounts the drama of a technology company that has survived two World Wars, the Great Depression, and numerous recessions. The cast of characters is full of fascinating people who worked together to build a corporate empire-CEOs that steered Nortel perilously dose to the rocks of ruin, and leaders that gave the company the vision that allowed it to soar to new heights; dedicated scientists and engineers who drove the innovations that have kept Nortel at the front of the pack; politicians and regulators with their own agendas; contacts and customers around the globe that each had a role to play in the Nortel story. Over its long history, Nortel has gone through several corpo­ rate shake-ups. These frequent transformations have kept the company lean and focused, a battle-hardened veteran well pre­ pared to deal with turbulence and confrontation. In fact, it is out of disruption and discontinuities in 1narkets, products, and technologies that Nortel has emerged triu1nphant many continued on backfl.ap ... ,- Hoiu Innovation a11d Vision C,reated a Nettvork Giant l A R R Y M AC D0NAlD ,1 JOHN WILEY & SONS Toronto• New York• Chichester• Weinheim •Brisbane• Singapore Copyright© 2000 by Larry MacDonald All rights reserved. No part of this work covered by the copyright herein may be reproduced or used in any form or by any means­ graphic, electronic or mechanical-without the prior written permission of the publisher. Any request for photocopying, recording, taping or information storage and retrieval systems of any part of this book shall be directed in writing to CAN COPY, 6 Adelaide Street East, Suite 900, Toronto, Ontario, MSA 1H6. Care has been taken to trace ownership of copyright material contained in this book. The Publishers will gladly receive any information that will enable them to rectify any reference or credit line in subsequent editions. John Wiley & Sons Canada Ltd 22 Worcester Road Etobicoke, Ontario M9W lLl Canadian Cataloguing in Publication Data MacDonald, Larry Nortel Networks: how innovation and vision created a network giant Includes index. ISBN 0-47 1-64542-7 1. Nortel Networks - History 2. Northern Telecom Limited - History I. Title. HD9696.T444N67 2000 338.7 '621382 C00-932210-8 Production Credits Cover & Text Design: Interrobang Graphic Design Inc. Printer: Tri-Graphic Printing 10 9 8 7 6 5 4 3 2 l To my father and mother