Last week the two vendors announced they would partner to develop and market unified communications products.
The stated aim of the deal was to help corporate telephony technology make the transition to the world of Voice over Internet Protocol (VoIP) and integration with PCs.
But of course, as Nortel and Microsoft said in a statement announcing the deal, it's also about the bottom line.
The pair want to take a greater share of the burgeoning VoIP market that rivals Cisco and Avaya are currently doing so well in.
Now the problem for Australian CIOs and IT managers is that Cisco and Microsoft already work closely together in this area.
For example, star Microsoft partner Dimension Data is also Cisco's biggest local reseller.
DiData has proudly been championing its recent VoIP deployment at construction heavyweight Leighton as one example of its ability to bring Microsoft and Cisco together.
Microsoft executives have also been regular attendees at Cisco telephony events ... for example the software giant's local unified communications boss Oscar Trimboli.
The new Nortel relationship may throw a spanner in this previously harmonious relationship.
How easy will it be to get Microsoft and Cisco to work together from now on, on both technical and personnel fronts?
Traditional PABX systems are not known for their interoperability ... it would be a bad outcome to start the VoIP era by going back to those days.
Cisco declined to comment on the issue, while Microsoft's Trimboli played down the implications in an e-mail to your writer.
"Microsoft recognises that interoperability is a critical part of communications solutions," he wrote.
"So we want to work with as many partners as possible to offer customers the greatest choice in how they deploy unified communications solutions. Microsoft has partnerships with Cisco, Avaya, Mitel and NEC Phillips around integration and interoperability."
But as Trimboli noted ... "the Nortel partnership will be a preferred offering from both companies".
Your writer can't help but think Nortel's special status will end up generating some headaches down the road.
Will Microsoft's new Nortel relationship create problems for Aussie IT managers or will it result in better technology? Drop me a line directly at email@example.com.