Nortel
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Nortel

September 03, 2008 10:00 ET

"Cisco Energy Tax" Costs Companies an Estimated $6.1 Billion Over Five Years

Nortel Expands Energy Campaign, Online Community to Vote and Select Ad

TORONTO, ONTARIO--(Marketwire - Sept. 3, 2008) -

Editors Note: Two videos are included with this press release.

It's getting serious. Energy costs are going through the roof. And companies of all sizes need to find ways of reducing their consumption - and their spend. While some vendors are squeezing their customers with high prices and energy-consuming products, Nortel(1) (TSX:NT)(NYSE:NT) is delivering solutions that are not only energy efficient, but bring new levels of performance as they migrate toward Unified Communications to improve business operations and lower expenses.

Nortel has an important message to get out to businesses around the world, and you get to vote on how to spread the word!

The Message:

Stop paying the Cisco Energy Tax!

Organizations around the world have collectively spent an estimated $6.1 billion(3) more on energy expenses in the last five years than they needed to. That's more than the gross domestic product of a small country. Why? Because too many customers are unknowingly choosing a networking solution that is highly energy inefficient.

Today, Nortel is getting louder about this message - telling the market in no uncertain terms that there is a better way, a more cost-effective way, to do business.

The Calculation:

The $6.1 billion(3) number is simply sound math. Dell'Oro Group(4) research on installed data/voice networks, crunched through the Nortel Energy Efficiency Calculator, estimated how much it is costing businesses to stay with Cisco. Over a five-year period, businesses have paid $6.1 billion(3) more in energy costs to power and cool Cisco networks than they would have had they used a comparable Nortel configuration. This isn't hype - this is billions in potential savings lost that could be applied to deploying Unified Communications technologies that leverage the Web 2.0 applications to revolutionize business processes.

IDC estimates 12-15 percent of total energy costs for enterprises are network related. A Nortel data network consumes up to 40 percent less energy than a comparable network from the main competition, and can have a nearly 50 percent lower total cost of ownership(2).

Peter Kendall, executive director for Earth Rangers, a charitable organization focused on children and the environment, said, "Earth Rangers is dedicated to environmental education that empowers children to make sustainable choices. Doing our part to save energy and maximize resources is important to us, so it is only natural that we would choose the most energy-efficient networking solution available. In addition to reducing our carbon footprint, the Nortel solution has enabled us to lower costs and to free-up those expenditures and apply them to our programs."

Taking the Message to the Market:

In May, Nortel drove this story home through an online and print campaign. Customers responded, and the message started getting through: you don't need to pay the Cisco Energy Tax. Today, Nortel is taking that message and getting louder. From online ads to TV spots on CNN starting today in North America, later this week in Europe, and globally on September 15 - we're telling the market: there is a better way. Two ads will run on CNN:

- Nortel "Piles" Commercial. How much is your network costing you?

- Nortel "Holes" Commercial. There's a money leak somewhere...hundreds of thousands of dollars going down the drain. Perhaps it's somewhere you never thought to look.

Online Community - you can vote:

We decided to recognize the creativity (or at least the effort...) of our people. So we've posted three of the videos on Buzzboard and we're asking you to vote on your favorite. We'll take the winner and feature it in an online advertisement in October.

Nortel is asking for input on the best way to get this message out to the on-line community - asking you to vote on which is your favorite among "grass-roots" videos created internally by Nortel employees, who are pretty energized about this campaign. Some of these videos are pretty polished; some just have a ton of heart. All tell a compelling story: Nortel saves customers money.

Visit Nortel blog Buzzboard to vote for the video that you like best and which best conveys the message: Stop paying the "Cisco Energy Tax."(2) The winning video will be featured in an online advertisement in October.

- The Nortel Robot - This fully animated piece follows a lonely robot as he finds an energy efficient Nortel oasis in a dark and dreary future world.

- Socks and Sandals - Nortel's energy efficient solutions solve consumption problems, and a few grooming issues.

- Screaming for Help - Even youngsters understand the importance of being energy efficient.

Background:

Nortel launched the "Cisco Energy Tax"(2) pilot program earlier this year at the Interop and VoiceCon trade shows, and it struck a chord with customers. Energy efficiency has become a critical factor for enterprises of all sizes, especially given high energy costs. According to a NYSE Euronext report, 62 percent of CIO's expect to spend more, not less, on energy in the coming year. That's just not acceptable and doesn't have to be the case.

Nortel then followed up with the placement of select print ads, the launch of the on-line Nortel Energy Efficiency Calculator, a social media program, and North American "energy savings credit program" for new customer of its data networking solutions.

The pilot project has generated solid momentum, contributing to a significant increase in North American leads and the sales funnel for enterprise data products, prompting Nortel to extend the program to a full global launch.

Quotes:

Joel Hackney, president, Enterprise Solutions, Nortel

- "As companies move rapidly to Unified Communications they require a network that is robust and highly energy efficient. The Nortel Energy Efficiency Calculator gives organizations a simple way to calculate how much they can save by working with Nortel. Those savings, particularly valuable in tough economic times, can be applied to driving an entity's overall competitiveness."

- "Energy costs continue to skyrocket and information technology accounts for up to 25 percent of operational expenses. It only makes sense to deploy the most energy efficient networking equipment as companies begin deploying real-time applications such as Unified Communications. Nortel helps customers save up to 40 percent on the networking energy costs while at the same time improving business processes, making enterprises more nimble and customer-focused."

Lauren Flaherty, chief marketing officer, Nortel

- "Energy costs are the number one issue at the IT decision-making table. And Nortel is the partner that will help enterprises reduce their consumption, save money and be more competitive in the global economy."

- "Today's decision makers are the most-connected, best-informed buyers in history. They want tools that help them gauge cost and value. That's what they're telling us so that's why we are taking this campaign from a buzz to a roar - amplifying the reach of Nortel's energy savings message by moving from a pilot program to a full global launch."

- "Energy is an important U.S. election issue, which makes the timing of the next phase of Nortel's campaign particularly significant. Viewership of CNN is expected to spike in the run-up to the elections, meaning more IT decision makers will hear about Nortel's solution to an issue that is front and center for them."

Energy Savings Facts:

- Independent third-party analysis from the Tolly Group(4) proves that Nortel's energy efficient solutions(2) consume up to 40 percent less power than similar Cisco switching products.

- Nortel's energy efficient solutions can help a large enterprise with 10,000 users save up to $1.3 million over five years.

- The easy-to-use Nortel Energy Efficiency Calculator is a tool that allows customers to gauge potential energy consumption and cost savings based on different deployment scenarios.

Tags / Keywords: Nortel, "Cisco Energy Tax"(2), energy calculator, data networking solutions

Links:

- Related announcements:

-- August 5, 2008: Nortel Offers Energy Savings Credit to Combat the "Cisco Energy Tax"(2)

-- July 8, 2008: Nortel Power Savings Drive Enterprise Customer Adoption

- The Nortel Energy Efficiency Calculator: http://www.nortel.com/saveenergy

- Follow the "Cisco Energy Tax"(2) and the energy efficiency debate on Nortel's Buzzboard news blog: http://blogs.nortel.com/buzzboard/tag/energyefficiency/

-The Tolly Group Report: http://www.nortel.com/solutions/conv/collateral/tolly208298_nortel_converged_netenergy_costs_july08.pdf

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About Nortel

Nortel is a recognized leader in delivering communications capabilities that make the promise of Business Made Simple a reality for our customers. Our next-generation technologies, for both service provider and enterprise networks, support multimedia and business-critical applications. Nortel's technologies are designed to help eliminate today's barriers to efficiency, speed and performance by simplifying networks and connecting people to the information they need, when they need it. Nortel does business in more than 150 countries around the world. For more information, visit Nortel on the Web at www.nortel.com. For the latest Nortel news, visit www.nortel.com/news.

Certain statements in this press release may contain words such as "could", "expects", "may", "anticipates", "believes", "intends", "estimates", "targets", "envisions", "seeks" and other similar language and are considered forward-looking statements or information under applicable securities legislation. These statements are based on Nortel's current expectations, estimates, forecasts and projections about the operating environment, economies and markets in which Nortel operates. These statements are subject to important assumptions, risks and uncertainties, which are difficult to predict and the actual outcome may be materially different from those contemplated in forward-looking statements. For additional information with respect to certain of these and other factors, see Nortel's Annual Report on Form10-K, Quarterly Reports on Form 10-Q and other securities filings with the SEC. Unless otherwise required by applicable securities laws, Nortel disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

(1)Nortel, the Nortel logo and the Globemark are trademarks of Nortel Networks.

(2)The Tolly Group Report Number 208298, July 2008, reported the results of a power consumption evaluation of six Nortel converged data network products consisting of large and medium core and wiring closet Ethernet Routing Switches (ERS), enterprise branch office routers, and IP phones compared to similar Cisco products on the basis of power consumption and heat dissipation, and five-year operational cost. "Cisco Energy Tax" refers to up to 40 percent energy consumption savings when using these Nortel products instead of comparable Cisco products. Cisco is a registered trademark of Cisco Systems, Inc. and/or its affiliates in the U.S. and certain other countries.

(3)The calculated savings is an estimated assumption based on Dell'Oro reports and calculations using the Nortel Energy Efficiency Calculator for the time period '04-'07 and pro-rated YTD 2008. All assumptions are available at www.nortel.com/SaveEnergy.

(4)This is a 3rd party link as described in our Web linking practices.

Use of the terms "partner" and "partnership" does not imply a legal partnership between Nortel and any other party.

To view the Nortel "Piles" Commercial please visit the following link: www.youtube.com/watch?v=4Y3FG1-TxWg

To view the Nortel "Holes" Commercial please visit the following link: www.youtube.com/watch?v=V26nt2Yfw3Q

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