It's akin to David throwing that stone at Goliath.

Nortel Networks, the Toronto-based company that has just 4% of the market for office-communications networks, is challenging Cisco Systems, a star in the sector, with a negative campaign.

In new print and Web ads, Nortel tries to slice into Cisco's customer base by declaring that Cisco's equipment uses twice as much energy as that of Nortel's. The campaign, aimed directly at the honchos who make corporate purchasing decisions, offers the tagline "The Cisco Energy Tax." The ads come at a time of growing dread in the U.S. about rising energy costs.

 
Nortel, which normally relies on conventional media campaigns, has taken more of an edge this time to leverage its marketing budget. It has linked to bloggers, launched a Web-based "energy efficiency calculator," even posted grainy trade-show videos on YouTube.

Cisco isn't amused. As part of its marketing campaign, Nortel bought the Internet domain names "ciscoenergytax.com" and "yourciscoenergytax.com." Cisco complained to Nortel, saying it was a trademark violation. Nortel relented and gave up the names.

Cisco wouldn't address the Nortel claims directly, but spokeswoman Linda Horiuchi says there are no industry standards to measure "green"; only Cisco's gear meets the environmental requirements of the product-testing company Miercom, she said.

Nortel, whose stock has lost two-thirds of its value in the past year, needs to complete a Hail Mary pass. Over the past decade, Cisco has run away with the enterprise-networks business, and now has 74% of the $18 billion market, according to data from market-research firm Dell'Oro Group. Its secret play was finding a way to convert voice communication into data packets and routing them via the Internet -- far cheaper than using traditional "pipe" to transmit conversation.

More recently, Nortel has begun to face other pressures, including new entrants from China that have driven down network-gear prices, and consolidation among the telecom operators that have been Nortel's core customers.

Nortel is countering with the argument that Cisco's technology, as successful as it has been in the marketplace, is an energy hog. In its ads, Nortel claims that Cisco's data networks "are costing you 100% too much." At trade shows, Nortel staff attach wattage meters to comparable Nortel and Cisco gear in an effort to show that Nortel's gear is much more energy-efficient. The company posted a film of the demo on YouTube.

Data networks are the backbone of communications systems that handle telephone, computer and hand-held wireless-device traffic. Nortel is hardly the only equipment maker trying to tap into rising concerns about the cost of sending more video, storing more files and using more devices. Redback Networks, a unit of Telefon AB L.M. Ericsson, also cites research showing that its gear is particularly energy efficient.

Nortel, which is making a bid to boost its sales to corporate customers, says it came upon the marketing idea last year. At the time, one of its customers, a U.S. agency, had no more power in its grid but needed to grow without building a data center elsewhere, according to Nettleton Payne, Nortel's North American marketing director.

Sales staff created a spreadsheet for the agency that allowed it to customize its electricity costs based on the equipment used and local utility rates. The company is preparing to put a similar tool on the Web.

Nortel enjoyed some buzz at the May trade show Interop in Las Vegas, where it placed a large arrow on its booth guiding people inside: "Step around this corner to calculate your Cisco Energy Tax." That is when the wattage meters appeared.

John McNeil, Nortel's advertising account executive at McCann Worldgroup San Francisco, a division of InterPublic Group, noticed the chatter on tech blogs, and thought "maybe we should prime the pump." To reach the influential Silicon Valley audience, the company took out a full-page ad in the San Jose Mercury News that read: "Type This Into Your Search Engine: The Cisco Energy Tax." Doing so in Google yields the following headline: "Cisco loses $2M order to ruthless Nortel energy efficiency calculator."

The message worked with the Spring Independent School District, in Houston. Chris Kent, a network engineer, says he used the calculator to show his board why they should stick with Nortel, even after a Cisco sales rep made a persuasive case -- to board members -- for switching vendors.

"There is no way to verify the energy savings, since our network equipment is mixed in with the other energy usage of the school," says Mr. Kent. But the calculator "made our decision a lot easier."

 Source:wsj.com