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Nortel Demise Marks the Beginning of a Huge Category Shift

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As you've no doubt read, Nortel Networks has filed for bankruptcy, marking the demise of a once leading company in the communications industry. Is Nortel just another unfortunate victim of the recession? Does it indicate major problems for all providers of telephony solutions? No and no.

I've worked in the telecommunications industry for more than 35 years and I've seen many changes. Looking back over the past 10 years there has been a very clear and consistent trend; the organizations who build their business in the TDM digital age have struggled mightily to shift to the new IP world. So, while the headlines emphasize the Nortel decline, I believe this has been a trend which has been extremely consistent and, I believe, Nortel is the first "headliner" to sink, but not the last. Avaya and Siemens' acquisitions by private equity companies and Mitel's merger with Inter-Tel are all signs of legacy companies trying to survive in a new world. While we feel terrible about the 35,000 people who might lose their jobs as a result of the bankruptcy, the Nortel story has important long-term industry implications that go beyond "a company’s fall from grace" or "another victim of the recession." It signals a major category shift from old TDM digital equipment to pure IP unified communications, which offers a far more scalable and capable solution at a much lower cost.

Which is why ShoreTel stands to benefit from the exit of Nortel. Unlike most other vendors, ShoreTel began in the IP era with a blank slate so we are focused 100 percent on delivering superior IP-based business communications systems. We have continued to invest in our unified communications solutions and open architecture, and we offer a feature-rich and uniquely scalable platform that's easy to deploy, administer and use, especially across multiple sites.

And we are a stable company with $100M cash in the bank. We have continued to grow despite the downturn with positive cash flow for the last three fiscal years. This means we are well-positioned to become the go-to supplier for customers that may otherwise have looked at Nortel or other companies that don't offer a modern communications platform.

For existing Nortel customers that wonder how they can maintain and grow their systems without a vendor to support them, it's important to recognize that ShoreTel does not require a forklift upgrade, so customers can grow using ShoreTel and then replace their aging Nortel systems as needed - a simple, cost-effective path to the future.

The recession is creating significant hardship throughout our country and the world, but an important part of the recovery will be companies that leverage new technology to become more efficient and productive, enabling them to grow and begin hiring again. As a provider of a business communications system that helps companies operate more efficiently and collaborate more effectively, ShoreTel is ready to help.

John W. Combs