The development of LTE (Long Term Evolution) high-speed wireless networks has accelerated and at the same time WiMax hasn't evolved as quickly as Nortel had expected, according to Gerry Collins, director of wireless for Europe, the Middle East and Africa at Nortel.
"We looked at our portfolio and felt we hadn't addressed either segment very well," Collins said.
So instead of trying to do both, it will now on spend the majority of its R&D budget on LTE, to be able to satisfy the demands of established operators like Verizon, according to Collins.
Nortel has been hit hard by the downturn in the telecom sector, and wasn't able to afford spending the large amounts of money and resources it takes to remain competitive in both areas, according to Richard Webb, directing analyst at Infonetics.
"Nortel had to prioritize, and has decided that LTE was a bigger opportunity," said Webb.
But Nortel doesn't want to turn its back on WiMax completely -- it still feels WiMax will provide cost-effective coverage and mobile broadband capabilities for early movers in the wireless broadband market, especially in parts of the world where broadband is a scarce resource, according to a statement. Hence the deal with Alvarion.
The two companies will integrate Alvarion's radio access network technology, with Nortel's core network and backhaul products. Nortel will also resell Alvarion's WiMax products, which will help the Israeli company extend its coverage, according to Webb.
Since Nortel's WiMax products will be discontinued, existing customers will be transitioned to Alvarion base stations. Collins didn't want to elaborate on possible discounts, but said "customers' faith" in Nortel will be rewarded.