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Microsoft, Nortel Team Up On Unified Communications

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Author: WildC@rd

Microsoft Corp. and Nortel Networks Corp. have struck a four-year deal to develop and sell products that make it easier for business people to locate and communicate with one another. The wide-ranging alliance announced Tuesday marks the latest step in Microsoft's ambitious plan to find success in the communications technology business, as the market for its Windows operating system and Office software grows more saturated. ''People say, 'How is Microsoft going to grow?' You know, you usually have to start with something pretty big. Everybody communicates. Everybody uses the phone,'' Microsoft Chief Executive Steve Ballmer said in an interview with The Associated Press. The investment in communications technology also shows that Microsoft has a place in a much broader set of devices than the traditional PC, he said. ''Four or five years back people were asking, 'Are people going to need PCs? Maybe all they're going to need is phones,''' he said. ''I mean, the fact of the matter is I think people are going to want to have things with big screens and little screens, keyboards and no keyboards _ and I just want them to all run our software.'' Nortel CEO Mike Zafirovski said the deal will allow the telecommunications equipment maker to get a head start as more companies move toward offering futuristic, software-based communications products. He said Toronto-based Nortel expects to see more than $1 billion in revenue between 2007 and 2009 as a result of the deal. In striking such a broad deal, Redmond-based Microsoft and Nortel are betting that companies will want high-tech products that let people easily send e-mail, fire off instant messages or call colleagues and clients, regardless of location or the device they are using. For example, a person working in a hotel room would be able to take calls to an office phone number over a laptop computer. Another worker could respond to an e-mail by placing a conference call to everyone addressed in the message, just by clicking a few buttons. And some companies could instantly tell whether their workers are on the phone, available by e-mail or otherwise occupied. Such ideas are enticing. But analyst Peter Pawlak with independent researchers Directions on Microsoft said most companies are gradually adopting such technology when they need new phones or move offices. Ballmer said he believes companies will be compelled to upgrade as consumers start using increasingly high-tech gadgets in their spare time, and pressure their bosses for similar technology at work. But he conceded that it's hard to say how fast companies will move. ''It's 100 percent that it's going to happen and happen quickly. The only question is how quickly in business,'' he said. Nortel shares gained 12 cents, or 6.1 percent, to close at $2.08 on the New York Stock Exchange. Microsoft shares rose 26 cents, or 1.2 percent, to finish at $22.74 on the Nasdaq Stock Market. Ballmer said both companies will contribute money to develop and market products as part of the deal. Microsoft also will pay an undisclosed amount to license patents from Nortel. The companies said the deal could be extended beyond its original four-year term. Microsoft is still investing in its communications technology push, Ballmer said, but the company hopes those investments will pay off more quickly than other areas where Microsoft has invested heavily, such as its money-losing Xbox video game console business. Pawlak said there's plenty of potential in the sector for both Nortel and Microsoft. But he said it's hard to say how significant this deal will be for the two companies, since neither released many specifics about how they would collaborate on individual technologies. ''They didn't say anything quite that specific,'' he said. ''They sort of waved their hands about integration and alignment of product plans and strategies, and things like that.''
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