Nortel Networks, IBM Collaborate to Create Advanced Network Switching for Data Centers; Features Designed to Reduce Costs, Increase Availability

Business Wire, Feb 18, 2003

Business Editors/High-Tech Writers

SANTA CLARA, Calif.--(BUSINESS WIRE)--Feb. 18, 2003

Nortel Networks (NYSE:NT)(TSX:NT) and IBM today announced an agreement under which Nortel Networks intends to build advanced LAN (local area network) switches for the IBM eServer BladeCenter.

The Nortel Networks switches are designed to provide comprehensive traffic management among the server blades of the IBM eServer BladeCenter, help increase overall system performance, and help lower customers' total cost of ownership.

The IBM eServer BladeCenter is expected to be one of the first modular server platforms to offer an advanced LAN switch in the blade server chassis, giving enterprise customers the ability to increase the effectiveness of their data center infrastructure. The switch is also designed to help provide security differentiation to the IBM eServer BladeCenter, making it among the most robust blade server offerings in the industry. Integrating an advanced, embedded LAN switch into the IBM BladeCenter can simplify the infrastructure, making management, and maintenance easier.

"Through this relationship with Nortel Networks, we will offer high-end Ethernet switch integration that can help allow our customers to lower their infrastructure costs, all with increased availability," said Jeff Benck, director, eServer BladeCenter systems, IBM. "Instead of customers using external switches, the functionality will be housed within the BladeCenter chassis and managed through IBM Director."

"This new work with IBM brings together technology from leaders in the server and data networking segments into an integrated solution that will offer significant benefits to customers -- added security, higher performance, higher system availability and increased return on investment," said Oscar Rodriguez, president and general manager, Enterprise Solutions, Nortel Networks.

"Just as the IBM eServer BladeCenter has helped consolidate the server environment, Nortel Networks embedded LAN switch will consolidate numerous switches, routers and appliances that provide traffic management," Rodriguez said. "The combination of an eServer BladeCenter with an embedded LAN switch will also result in a very strong, robust infrastructure platform."

"America Online is pleased to see the integration of high-performance blade servers and full-function LAN switches in a dense, potentially cost-effective platform," said Joe Barrett, senior vice president, systems operations, America Online, Inc. "The promise of this new breed of integrated computer and switch products is reduced cost, power, footprint, and network complexity in comparison to traditional multiple-box solutions. We're glad to see industry leaders coming together to deliver these and other innovations that may help us provide better service to our members by increasing our data center's cost effectiveness. We look forward to evaluating IBM's blade server with the embedded Nortel Networks switch as soon as it becomes available."

IBM's expertise in designing extremely dense, blade servers will be combined with Nortel Networks industry excellence in traffic management and switching technology to create a robust, integrated platform on which to build an infrastructure that is designed to accommodate dynamic provisioning of data center and network computing functions.

The global blade server market is projected to grow to nearly US$4 billion by 2006, according to IDC(1).

IBM is the world's largest information technology company, with 80 years of leadership in helping businesses innovate. Drawing on resources from across IBM and key Business Partners, IBM offers a wide range of services, solutions and technologies that enable customers, large and small, to take full advantage of the new era of e-business. For more information about IBM, visit www.ibm.com.

Nortel Networks is an industry leader and innovator focused on transforming how the world communicates and exchanges information. The Company is supplying its service provider and enterprise customers with communications technology and infrastructure to enable value-added IP data, voice and multimedia services spanning Wireless Networks, Wireline Networks, Enterprise Networks, and Optical Networks. As a global company, Nortel Networks does business in more than 150 countries. More information about Nortel Networks can be found on the Web at www.nortelnetworks.com.

Certain information included in this press release is forward-looking and is subject to important risks and uncertainties. The results or events predicted in these statements may differ materially from actual results or events. Factors which could cause results or events to differ from current expectations include, among other things: the severity and duration of the industry adjustment; the sufficiency of our restructuring activities, including the potential for higher actual costs to be incurred in connection with restructuring actions compared to the estimated costs of such actions; fluctuations in operating results and general industry, economic and market conditions and growth rates; the ability to recruit and retain qualified employees; fluctuations in cash flow, the level of outstanding debt and debt ratings; the ability to meet financial covenants contained in our credit agreements; the ability to make acquisitions and/or integrate the operations and technologies of acquired businesses in an effective manner; the impact of rapid technological and market change; the impact of price and product competition; international growth and global economic conditions, particularly in emerging markets and including interest rate and currency exchange rate fluctuations; the impact of rationalization in the telecommunications industry; the dependence on new product development; the uncertainties of the Internet; the impact of the credit risks of our customers and the impact of customer financing and commitments; stock market volatility; the entrance into an increased number of supply and outsourcing contracts which contain delivery and installation provisions, which, if not met, could result in the payment of substantial penalties or liquidated damages; the ability to obtain timely, adequate and reasonably priced component parts from suppliers and internal manufacturing capacity; the future success of our strategic alliances; and the adverse resolution of litigation. For additional information with respect to certain of these and other factors, see the reports filed by Nortel Networks with the United States Securities and Exchange Commission. Unless otherwise required by applicable securities laws, Nortel Networks disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.