Microsoft and Nortel Deliver Unified Communications
Microsoft is pairing with Nortel in a four-year alliance, taking a software-centric approach to converging channels like email, instant messaging, telephony, and multimedia conferencing. The partnership--the Innovative Communications Alliance--continues Microsoft's push to ramp up its unified communications efforts, and comes just a few weeks after Microsoft announced its unified communications road map strategy June 26.
During Tuesday's press conference, Microsoft CEO Steve Ballmer summarized the partnership into three buckets: R&D, sales and marketing, and systems integration. The companies will cross-license intellectual property and form joint teams to collaborate on product development to deliver enterprise, mobile, and wireline carrier solutions. On the sales and marketing front, they'll market and sell their joint solutions, develop a series of solutions for SMBs and public and private organizations, craft a training and incentive program for their sales teams, and build a joint channel ecosystem. Nortel is forming a dedicated systems integration division concentrating on their joint unified communications solutions.
"You can clearly say that Microsoft with Nortel is in the business not just of unified communications, but in the business of VoIP," Ballmer said. "With this alliance, we really punctuate the fact that voice is absolutely a part of Microsoft unified communications."
Redmond has five products, either new or significantly upgraded, that are part of the Microsoft Office family spanning VoIP, call processing, unified messaging, conferencing, and telephony devices, that will be available "not just on the PC, but on mobile and on desktop phones" over the next 12 months, according to Ballmer. Nortel, however, obviously has more experience in the space. Mike Zafirovski, president and CEO of Nortel, contends that Nortel has had a mature unified communications product in the market since 2003, has more than 300 VoIP installations, and has delivered more than 50 million data ports and 50 million telephony lines.
The companies will begin aligning their sales, marketing and development teams this quarter, but won't roll out the products until 2007. While Nortel does expect the alliance to generate more than $1 billion in revenue for Nortel in the next three years, it and Microsoft will have to contend with IP telephony heavyweights like Cisco Systems and Avaya.
In response to the Nortel-Microsoft announcement, Nortel rival Avaya highlighted its own partnerships. "We don't believe that any one company will provide all of the communications needs for customers," says Eileen Rudden, vice president and general manager of Avaya Communications Applications Division. "Partnerships are necessary between companies to provide customers with solutions to converge communications applications and infrastructure, and create new capabilities and value for businesses. We partner with Microsoft, IBM, and others to make new communications solutions a reality for businesses."
But when Ballmer was asked how the Nortel partnership announcement differs from others Microsoft has made with communication suppliers like Siemens, he responded that the Nortel partnership is about alignment. "This is beyond interoperability, this is really about getting a coherent offer in the marketplace between the two companies," he said. That, according to Sheila McGee-Smith, president and principal analyst of McGee-Smith Analytics, reveals that while the alliance is not exclusive--Microsoft will continue working for interoperability with other IP telephony vendors--Microsoft will "have something categorically different with Nortel," she says.
McGee-Smith also notes the significance of Ballmer presence during the press conference. Having Ballmer "raises the level of Microsoft's commitment." But from McGee-Smith's perspective, the biggest drawback of the alliance is timing. "We're not going to see anything in the market for probably at least a year," she says. What some of the other competitors have "is a story of 'we have product now that makes the changes that Microsoft and Nortel are promising.'"
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