Nortel will channel funds into key areas to boost its standing

Nortel has announced a new direction in research and development, explaining that it was beginning a raft of strategic initiatives designed to boost its competitive position.

"Today's announcement is about a framework and model that will position Nortel as an industry innovation powerhouse. It will also provide a strategic approach to determine where new R&D work is placed and how resources are utilised," said John Roese, Nortel chief technology officer.

"This new skills-based strategy has already proven to be successful in driving innovation into the market. Many of Nortel's groundbreaking technologies – like 40G/100G optical, PBB/PBT, OFDM-MIMO – have been created and developed by co-located teams of critical mass, talent, and like skills. Our announcement today is to take this proven benefit of collaborative organisations to a company-wide scale."

In order to do this the firm will concentrate workers with expertise in areas within certain geographical areas, creating what it calls a "skills-based R &D site strategy". The firm will continue its 20-60-20 model, which involves funnelling different proportions of funds into different development areas.

"We refer to this as the 20-60-20 model. Twenty percent of our R&D investment is targeted at new, emerging technologies, 60 percent on existing technologies and 20 percent on legacy technologies that still require support for its customers. We also tightened our R&D spend to roughly 15 percent of revenue – more in line with the industry norm and the target operating model for Nortel." Roese explained.