Nortel defends deal discounting

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Networking vendor Nortel has defended its practice of heavily discounting hardware deals to win contracts in mid-size to larger Australian organisations.

Networking vendor Nortel has defended its practice of heavily discounting hardware deals to win contracts in mid-size to larger Australian organisations.

A source close to the industry has alleged Nortel had been working hard to basically discount its way into as many larger channel contracts as possible this quarter.

And Mick Regan, convergence director at Nortel, would not deny Nortel had been aggressively discounting into voice-and-data deals.

"We try to keep up with the market and what people are doing out there. We react to the business at hand and if it does come down to a price war, we will discount," he said.

Regan said Nortel would cut prices in any particular account as much as it felt was necessary, on a case-by-case basis. He would not how much price-cutting actually went on.

"I really don't like, personally, getting into discounting," he said. "But if we need to win an account for strategic reasons, we will."

Nortel always strove to ensure it still made money on the deal, however. "We try not to lose money on accounts," Regan said.

The vendor had a strict process it went through before deciding to cut prices on any one particular deal. So far, the strategy had been successful, he added, with many deals due to be announced.

"There are quite a lot of deals coming up," Regan said.

Regan said Nortel saw a readiness to discount as important to take advantage of a currently hot market for IP networking and telephony. More organisations -- and smaller organisations -- were updating their telecommunications systems.
 
"We see serious potential for service providers to offer a voice solution in the low-end space," Regan said.

A senior Nortel executive admitted to CRN late last year that a past reluctance to market directly to large businesses around the world had cost it enterprise share. The vendor had lost a number of major customers, Nortel told CRN at the time.

The company had worked to streamline its channel and shifted away from an 100 percent-channel sales model.

"A lot of major vendors want to deal with the vendor but are happy for the implementation to be done by the channel," said Nick Avakian, Australasia general manager for enterprise networks at Nortel, said at the time.

In April, Nortel appointed Anixter Australia as a distributor for its nPower channel. The vendor may still be mulling a partner cull following its first distribution review in more than two years.

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