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Last week Nortel announced the acquisition of open-source VoIP provider, Pingtel. If you hadn’t heard of Pingtel before the acquisition news, you’re not alone. The company has actually been around for a long time, but has failed to make a strong imprint on the industry.

I’m therefore in the same camp as Garrett Smith in believing that there’s not a lot of substance to the acquisition:

• This news is not big - The old guard has been getting in bed with IP PBX providers and open source projects in the space for the last two years. This is nothing new
• This is a cost cutting move - If you notice Nortel had a preexisting OEM relationship with Pingtel. Buying them will lower their costs because they are no longer paying the associated fees to Pingtel
• There is little value to be extracted out of the open source community [with which] Pingtel is associated - If anything, this is a feel good marketing move. Sure there have been 300 features improvements out of SIPfoundry, but what has been the net increase in profits - because at Nortel’s level that is what it is all about.

I could not agree more. It’s likely much like the Lineo sale to Motorola/Metrowerks with which I was involved: it wasn’t a Zimbra-like acquisition of $300 million or more. It was the only viable outcome for a company that had not lived up to its potential.

In short, I don’t believe the Pingtel acquisition points to the success of the open-source model, but rather suggests caution in the assumption that open source covers a multitude of poor business decisions. It doesn’t. It exacerbates them.

On the other hand, it can amplify sound strategic business decisions.