Microsoft and Nortel are to join forces to sell unified communications — products that integrate business applications with voice, video, email and instant messaging.
The chief executives of both companies launched the joint operation, which they are calling the Innovative Communications Alliance, to sell and market such offerings at a press conference on Wednesday afternoon.
Steve Ballmer and Mike Zafirovski first said back in July 2006 that they would work together on product integration, but this is the first time they have laid down concrete plans.
At the centre of the four-year deal is Microsoft's Communicator and Office Communications Server software and Nortel's Multimedia Communications Server — its IP PBX.
The global agreement will focus on two centres where the world's top IT professionals will be shown proof-of-concept services — one in North Carolina in the US, and one at Nortel's European headquarters in Maidenhead, England.
Integration, integration, integration
The first product that will integrate Microsoft and Nortel technology to form a single piece of hardware is the Unified Communication Branch. It will go to market in the fourth quarter of this year. Because the new device incorporates technology from Nortel and Microsoft, it eliminates the need for corporate customers to deploy a separate gateway or routing product to link the communications network with the Microsoft Office applications.
John Roese, Nortel's chief technology officer, said in an interview that the Microsoft relationship has already helped his company increase sales of its telephony products, which for the past few years have been placed third in terms of overall market share.
"It's good to have a large partner like Microsoft working with us," he said. "It gives comfort to the large companies. If you look at our combined R&D it's probably larger than anyone in the industry, so it's definitely been a significant selling point."
The companies claim they've already signed up dozens of customers, including multinational oil company Royal Dutch Shell.
Phillip Hagemann, chief information officer for Fred Weber, a medium-sized construction company based near St Louis, Missouri, said that a year ago his company was set to deploy an IP telephony solution from Cisco. But he reconsidered the decision when he heard that Nortel was working closely with Microsoft.
"Our users were already used to the Microsoft email and messaging clients," he said in an interview at the New York event. "Cisco has its own client software, and it would have been a big change. Cisco says you can integrate their solution with Microsoft, but it still would have been a headache for my IT guys. And like they say, 'Time is money.'"
Ultimately, Microsoft and Nortel expect an even deeper level of integration for their products.
"Presence information could show up in the comments on an Excel spreadsheet," Ballmer said. "That's how deeply we think we need to get with the integration."
Whether the Microsoft/Nortel alliance will be able to deliver on this promise is still unknown. Much of the deep integration that executives talked about on Wednesday isn't expected to hit the market until 2009.