Nortel and Fonality Mixing it Up

by Bruce Stewart

Tom Keating has a juicy post today about the apparently up and down deal between Fonality and former Nortel subsidiary, Blade Network Technolgies: Nortel Strong Arms Open Source Vendor. I was pretty surprised when I read Tom's earlier post on this deal, where he quoted a Fonality press release that included statements from a Blade executive praising their new Fonality system and the money they were able to save over a Nortel system by going that route. (Not surprised at all that they could see some serious savings by going with Fonality, but surprised that a company recently affiliated with Nortel was going on record about that). Now it's getting even more interesting, as it sure sounds like Nortel has leaned on Blade to retract their statements and send back the Fonality system. I won't try and summarize the whole incident here, but if you're interested you should definitely go read Tom's post for a very detailed accounting of what has transpired over the past few days, including transcripts of his conversations with Fonality CEO, Chris Lyman and Blade CEO, Vikram Mehta. As Chris points out, this kind of publicity is only good news for Fonality.

It leaves me wondering what exactly the relationship between Blade and Nortel is right now (besides obviously a little strained). Blade is repeatedly referred to as a "former Nortel subsidiary," but Tom's latest post points our that Eric Schoch, the Vice President of Business Development for Nortel, currently serves on Blade's board of directors, and that reports that Nortel still has a minority interest in Blade. So if that's the case, wouldn't you think Blade should have been able to get a pretty good deal on a Nortel system in the first place?