Bay Networks is risking the wrath of its partners following the $9.1 billion buyout by telecoms giant Nortel which will sell the vendor's networking products direct in a head-to-head channel conflict.
The acquisition, announced on 15 June following months of speculation, means Bay will remain as a wholly owned subsidiary of Nortel, while absorbing its enterprise data networks division to move into the Internet Protocol area.
But Malcolm Collins, managing director of European data networks at Nortel, said: 'Some of Bay's products will be sold directly into large corporates such as Barclays Bank, while service providers will offer the Bay portfolio.'
Richard Bradley, channel sales director at Cisco, claimed: 'In terms of Bay business in the UK, of which about 80 per cent of sales goes through an indirect strategy, Nortel does not bring anything to the two tier.'
But Graeme Allan, regional director at Bay Networks, played down any leanings towards increased channel competition. He said: 'The strategy is already a mix with indirect sales in US while in Europe, Bay sells through both service providers and indirect. There are always conflicts in the channel.'
Allan added that BT, which distributes some Nortel products, was selling other data companies' lines.
Richard Pryor-Jones, UK managing director at Azlan, believed the takeover would mean more opportunities with Nortel. 'I doubt there will be conflict, but Bay already has some direct resellers.'
Commenting on competitor Cisco, Allan said: 'It has become the weaker partner in many ways now that we have sorted out voice, financial debt and people resource.'
The takeover will involve a share swap to give Bay a 21 per cent stake in Nortel and is expected to be finalised during Q3, subject to shareholder approval.
David House, chairman, CEO and president of Bay Networks, will become president of Nortel as well as being appointed to the board of directors, while John Roth, president and CEO at the telecoms company, will keep the latter title and remain as a director.
Tech giant hit with second huge fine in two years
UK-based security distributor takes first steps into mainland Europe
Vendor talks up partner relationship at Inspire global conference
Firm claims that 7.2 million jobs will be created by AI over the next two decades