Nortel, Microsoft chart unified communications progress

Alliance for unified communications snares 500 customers, vendors say

Even though they fleshed out their joint strategy on the stage of “Saturday Night Live” a year ago, Nortel and Microsoft have since shown that their unified communications partnership is no joke.

Indeed, they appear to be making significant progress in their Innovative Communications Alliance (ICA). The companies say they have:

* Lined up 500 joint ICA customers, an increase from 300 last fall.

* Opened up two collaboration centers in Raleigh, N.C., and in Maidenhead, United Kingdom, which have been visited by 1,100 customers.

* Built 16 Microsoft technology centers in the last year equipped with live ICA demonstrations.

* Established 150 ICA demonstration centers around the world, more than seven times as many as they had a year ago.

* Has been recognized by market tracker Gartner as a unified communications leader in its “Magic Quadrant” grid of vendor and product positioning.

The companies formed ICA 18 months ago to jointly develop products combining Nortel’s voice technology with Microsoft’s application expertise for a unified communications market worth $26.5 billion last year and expected to near $50 billion by 2012, according to In-Stat and Wainhouse Research. Six months later, Microsoft CEO Steve Ballmer and Nortel CEO Mike Zafirovski updated reporters and analysts with a road map of where they planned to take ICA and what they planned to release in 2007 and 2008.

A rundown of the first batch of jointly developed unified communications offerings from the pair:

Offerings announced at that time included converged office, integrated branch, Session Initiation Protocol interoperability between Nortel’s Communications Server 1000 and Microsoft’s Exchange Server 2007, and integration between Nortel’s Multimedia Conferencing 5.0 system and Microsoft’s Office Communicator 2007.

“We are very much on plan and delivering the products, which were outlined by the CEOs,” says Ruchi Prasad, Nortel vice president and general manager for ICA.

General availability of more ICA products is expected to be announced next month at the VON Conference & Expo in San Jose.

The ICA alliance is viewed as a deep relationship heavy on joint development and product consolidation vs. more superficial multivendor interoperability and integration strategies favored by Cisco, IBM and others. For example, Nortel and Cisco recently agreed to integrate IBM’s Lotus Sametime software into their unified communications products but those are looser agreements of support rather than combined development of new products.

The vision of Cisco, which last year bought Web conferencing company WebEx in a multibillion-dollar deal, is that the network should be the nerve center of a unified communications setup.

Nortel and Microsoft argue that ICA differs from other unified communications initiatives in that it leverages the ubiquity of Microsoft's enterprise desktop and server software, enhanced with 100-plus years of telecom expertise form Nortel.

For Nortel, ICA is key to the company’s increasing reliance on software and services for future growth. ICA sales have been a contributor to its enterprise division realizing four consecutive quarters of double digit year-over-year growth, Prasad says. Customers are buying Nortel CS 1000 platforms — the company’s IP PBX — integration licenses, services, applications, and data products across the enterprise portfolio, she says.

Carriers are also interested in them for their own internal requirements as well as managed service rollouts, according to Nortel. Swisscom just completed a trial of the CS 2000 softswitch natively integrated with [Office Communication Server] 2007, Prasad says.

“Customers…are looking for Nortel and Microsoft to provide this bridge to the future where voice becomes an application in a PBX-less environment and deliver the road map and take them across this bridge,” she says.

Some customers are anxious to try ICA products out. Bruce Meyer, director of network services at ProMedica Healthcare in Toledo, Ohio, is waiting for a video/audioconferencing system based on Nortel’s Multimedia Communications Server 5100 product to save money on travel and on telecom services. He expects to see something this quarter or next.

“It’s a unique alliance because…it’s more than stamping logos on each others’ sales engineers cards and shake everybody’s hand,” Meyer says. “I figured 12 months was probably pretty good before we’d really start to know what this could be. Everything prior was two big companies exploring what can we do and can’t we do given our product line.”

Analysts caution any ICA sales to date do not include a fully-baked solution.

“What’s difficult to understand when they announce a joint customer is what products have come out due to the alliance, and what could have been possible without the alliance,” says Elizabeth Herrell of Forrester Research. “I think the way you’ll track it eventually — and I don’t think we can do it today — is like when OCS comes out with baked-in telephony features that are from Nortel. Then we’ll see if they have a fully integrated solution as opposed to solutions that are joined with gateways, etc.”software system for unified communications, says Zig Serafin, general manager of Microsoft’s unified communications group.

Herrell expects several ICA announcements this year to demonstrate gradual integration of the companies’ products. The whole enchilada will appear in 2010 when the alliance concludes, with a single

With this software, customers will be able to evolve from the Nortel Communications Server 1000 and 2000 IP telephony platforms to an OCS call management system enhanced by Nortel telephony feature modules, he says.

It will be one software system “utilizing IT infrastructure and management tools people have been used to in the Microsoft environment,” Serafin says.

Some analysts believe this goal puts the future of some Nortel software products in doubt.

“I don’t think it’s added a lot to Nortel’s credibility,” says Zeus Kerravala of the Yankee Group. “In many ways, it’s added a lot of questions: if you were a customer of Nortel’s before and you invested in things like their unified messaging software, should you indeed continue to invest in Nortel software? When you look at this alliance, a lot of it seems to indicate that that’s going to fall Microsoft’s way.”

Nortel says CallPilot, its unified messaging software “will continue to serve our customer's needs whenever appropriate.

“Nortel must be able to provide messaging to customers outside the ICA agreement,” a spokesman says. “Where industry consolidation has occurred and multiple e-mail platforms exist, CallPilot can bridge across the systems providing [unified messaging] to all users regardless of e-mail system. Nortel also sees some vertical markets with requirements to store voice and fax messages in a separate repository from e-mail which is a key component of CallPilot's architecture.”

The long-term future of Nortel’s CS 1000 IP PBX may not be as secure, the company indicates.

“Software-based VoIP is the future of voice, and Nortel is working aggressively with Microsoft and others to enable voice as an application,” the spokesman says.

“That said, the transition to that vision will happen over time. While software-based voice solutions like Microsoft OCS may be appropriate today for some businesses, most enterprise customers will not be ready to trust their voice needs to such major network transformation.”

While product rationalization plays out, more immediate goals for the alliance are to ramp up the number of integration services specialists trained on ICA products. The companies want to double Nortel’s 300 Microsoft certified engineers over the next year, and triple it in two years.

Nortel currently holds 23% of all Live Communications Server certifications and 40% of all OCS certifications, Prasad says. Indeed, the ICA alliance makes Nortel a significant channel for Microsoft as it looks to attain leadership in enterprise VoIP, IP telephony and unified communications.

“To Microsoft, they become an [independent software vendor] that builds a lot of advanced communications applications on top of the Office Communications Server platform, integrates with Exchange unified messaging and other related technologies,” Serafin says. “At the same time, Nortel is building and expanding their professional services capabilities in communications to provide a capability for all of the Microsoft communications applications. They become not only an important software partner for us over the long run but they also become an important implementation and services partner.”

Learn more about this topic

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