Microsoft and Nortel this week announced an ambitious four-year strategic alliance to jointly develop, sell and roll out unified communications and VoIP technology to enterprise customers.
The plan to merge Nortel’s IP telephony technology with Microsoft’s messaging and collaboration platforms was outlined at a press conference this week with Microsoft CEO Steve Ballmer, Nortel CEO Mike Zafirovski, and executives from both vendors. No specific licensing or financial details on the partnership were discussed.
The four-year alliance (with an option to extend the relationship) will be named the Innovative Communications Alliance. The goal is to transform all of Nortel’s VoIP features and call-control technology into software modules that will run on top of, or alongside, Microsoft unified communications servers. The companies will also develop technology to accelerate and prioritize Microsoft/Nortel unified communications traffic running on top of Nortel LAN, WAN and wireless network equipment.
The platform will be delivered by Nortel and Microsoft professional services groups and partners. The alliance will involve the cross-licensing of Microsoft and Nortel technologies for integrating existing products and creating new VoIP/messaging products. Cross-training of Microsoft and Nortel sales, channel partner and professional services organizations are also aspects of the deal.
Both companies’ CEOs said that the venture will cause a major shift in their respective approach to the enterprise IT market.
“You can squarely say that Microsoft, with Nortel, is in the business not just of unified communications, but of voice, quite clearly,” said Microsoft CEO Steve Balmer. “We and Nortel share a view [that] we can use industry standard phones, computers and servers, with the right software from our two companies, to galvanize this unified communications opportunity.”
While the deal officially puts Microsoft in the enterprise telephony market, for Nortel, the importance of the hook-up with Microsoft was even more critical, the company’s CEO indicated.
“We wanted to change the trajectory of [Nortel’s] enterprise business,” said Zafirovski. “Our new relationship with Microsoft represents an opportunity to create well over $1 billion in revenue for Nortel in the next [several] years [with] the combination of [Nortel] professional services, voice products and data pull-through [sales] from our customers.”
Initially, Microsoft and Nortel will create an interface between Microsoft’s Live Communication Server — which provides SIP-based presence, and real-time communications such as instant messaging and video — with Nortel’s Communication Server (CS) 1000 IP PBX, according to Steve Slattery president of Nortel’s Enterprise Solutions Business. In this model, Microsoft servers act as the primary call processing node, and tap into features and gateway services from a Nortel box.
“[This will provide] access to the advanced telephony functionally of Nortel’s CS 1000, and above and beyond, delivers PSTN access and dial plans to Microsoft’s Communicator client” attached to the LCS platform, Slattery said.
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.
“A lot of core VoIP call management will come as part of the Microsoft software UC platform,” said Anoop Gupta corporate vice president of Microsoft Unified Communication Group. Through software interfaces between the servers, hundreds of PBX features from Nortel will be delivered to PC and desktop IP phone clients, he said. The rollout of new products based on this model will begin in 2007, he said.
For Nortel, the “data pull-through” effect Zafirovski mentioned could result from Microsoft software being tied closer to Nortel network gear for QoS and traffic prioritization.
“What we are talking about is an application aware network to deliver a superior quality of experience to the user,” said Ruchi Prasad, vice president of global enterprise marketing for Nortel, in an interview. “This will involve be taking [code] from the [Microsoft unified communications] APIs and then putting that code in the software of the Nortel routers [and switches] in order to deliver a better quality of experience.”
Nortel and Microsoft have made past VoIP/messaging interoperability partnerships announcements, while Microsoft has made similar agreements with such vendors as Siemens, Alcatel and Cisco.
“This announcement is not about interoperability,” Ballmer said. “Of course we’ll have that. But this is about having an aligned offering in the market, beyond interoperability.” Ballmer likened the alliance to one Microsoft had in the 1990s with Digital Equipment Corp., where the two companies joint-developed hardware/software packages for large-scale e-mail networks.
“[In that example], we weren’t just interoperating. Four of five years later, we had millions of seats of Microsoft Exchange deployed. And Digital was the most important partner we had to do that.”
Although Microsoft’s Ballmer did not put dollar estimates on what it expects to see from the partnership, he outlined the joint unified communications move as a large opportunity.
“All communications in businesses will move to become IP based,” over the next several years, Ballmer said. “That literally means there are hundreds of millions of people who will be getting a new communications experience over the next four or five years. And if we can’t make that into a gigantic opportunity for Microsoft and Nortel, shame on us.”
Possibly standing in the way of the Microsoft-Nortel effort is Cisco, which has established itself as a leader in enterprise VoIP, messaging and owns the underlying network infrastructure in most businesses. IBM will also be a formidable competitor going forward.
“We are in the business, every day, of competing with IBM,” Ballmer said. “With Cisco, we have certain aspects of cooperation, but we have very important aspects of competition also in our relationship.”
The IDG News Service contributed to this report
