Update: Microsoft, Nortel join on unified comms

Microsoft Corp. and Nortel Networks Ltd. will unify their efforts to develop "unified communications" products to break down the barriers between telephony, voice mail, e-mail and instant-messaging systems. The companies have struck a four-year alliance to jointly develop and sell unified communications systems, they said Tuesday.

The companies' goal is ultimately to replace the office PBX (private branch exchange), voice-mail system, e-mail server and instant-messaging system with a single software platform based on products such as Microsoft Office Communications Server 2007 and Microsoft Exchange Server 2007 unified messaging.

As part of the deal, Nortel will move its traditional business phone systems onto Microsoft's unified communications software platform, adding additional functionality with its own software. Microsoft will have "deep collaboration" on development of the products, which will include call-center applications, telephony and mobile access systems, and data-networking infrastructure, the companies said.

The pact leaves no doubt that Microsoft is in the voice communications business, said Microsoft Chief Executive Officer Steve Ballmer during a press conference broadcast over the Web.

"With this alliance, we punctuate the fact that voice is absolutely a part of Microsoft unified communications," Ballmer said. "Like every other element of our information-worker portfolio, [voice must] really be very seamlessly integrated, intuitively delivered and consistently managed."

Microsoft sees unified communications as a way to communicate via e-mail, voice mail, VOIP (voice over Internet Protocol) instant messaging and video in a professional environment, using a single identity. Microsoft's Windows Live Messenger service already links many of those functions to a Hotmail e-mail address for consumers.

The companies will form joint teams to develop products for fixed, wireless and enterprise networks, targeting carriers, enterprise customers and small and medium-size businesses, they said. They hope that their collaboration will result in products with Microsoft's reputation for ease of use and Nortel's for network reliability.

"We'll be able to give our customers reasons to rethink their communications strategy and to expect much greater value from their communications investments," said Mike Zafirovski, Nortel's president and chief executive officer.

To market the jointly developed products, the companies have formed an organization called the Innovative Communications Alliance. They will build a joint sales channel with its own training and incentive program, they said.

Nortel will also become Microsoft's systems integration partner for advanced unified communications products. The deal could bring Nortel as much as US$1 billion in additional revenue, the company said. Nortel had revenue of around $10.5 billion in 2005.

The companies' chief executive officers, Steve Ballmer and Mike Zafirovski, will give more details at a news conference later Tuesday.

The jointly provided and developed products and services from Microsoft and Nortel will provide a transition path that will let customers protect their existing communications investments while taking advantage of new technology, Ballmer said.

"This alliance means that our customers will very quickly be able to evolve from using traditional business phone systems to the Microsoft/Nortel unified communications software platform," Ballmer said.