Nortel has spun off Channelware, the first company nurtured under the telecom equipment supplier's Ventures Programme to go independent, as a first step to breaking into the software and services market.
Channelware, which makes Netactive antipiracy software for mass market PC games, has secured $9.2 million in financing and will be run as a separate company, although Nortel will retain a 45 per cent stake.
Joanne Hyland, Nortel's vice president of new business opportunities, said: "Channelware's Netactive technology is a prime example of a radically innovative, Internet based concept being developed into a standalone business. Channelware was especially exciting because it had the potential to open up a totally new market space from the very beginning."
Nortel's Ventures Programme, which was established three years ago, is also currently nurturing four other projects that were initially dreampt up by its employees.
According to Hyland, one project started by several staff at the firm's Harlow, Essex site could be spun off within the next six to 12 months. The Harlow development focuses on fraud prevention using neural network technology and has been in the "ventures incubator" since March 1997.
Another scheme comes from a Nortel team in Raleigh, North Carolina, which is building a software reliability tool. Two others were started in Ottawa, Canada, with one group creating a tool for reengineering software code while coding is taking place, and the other developing products for direct database distribution in a client/server environment.
Hyland said that although the ventures were diverse, all developments were software related because Nortel had ambitions to expand out of networking into software and services.
She added that while some of the projects may be integrated into Nortel's product line, others may be spun off as independent businesses, although Nortel would always retain an equity stake.
Although she would not reveal how much Nortel had invested in the projects, she acknowledged that the funds needed to take a project from inception to building a product or business could be between $2-10 million.
Nortel spent up to three months deciding on whether an idea was worth pursuing, before moving it to the incubation stage, where the firm would provide teams with help on business issues such as marketing and human resources.
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