Microsoft-Nortel Alliance Augurs Partner Opportunities
Under the wide-ranging Innovative Communications Alliance announced Tuesday, Microsoft and Nortel said they will collaborate on research and development to converge voice and IP networking services with software. Their goal: To replace the traditional desk telephone with a software communications platform and graphical user interface that unifies e-mail, voice mail, instant messaging, audio/video, telephony and voice-over-Internet call processing.
Plans call for Microsoft and Nortel to develop joint sales and marketing programs, including a training and sales incentive program for their respective sales forces, as well as to build an ecosystem of ISVs, systems integrators and telephony partners to deliver joint solutions to customers.
Although Microsoft and Nortel said they will tap into their solution provider channels to build that ecosystem, it's unclear which products, solutions and services partners will be authorized to sell.
Nortel, however, is positioned to take a big bite out of the services business that results from the partnership. According to a statement issued Tuesday, for example, Nortel is identified twice as Microsoft's strategic partner for advanced communications solutions and as the strategic systems integrator for Microsoft's unified communications platform.
In a conference call Tuesday, Microsoft CEO Steve Ballmer applauded Nortel's willingness to create a systems integration division focused on Microsoft's unified communications platform and Nortel's plans to deliver new applications and infrastructure to the market.
"This means our customers can and will quickly evolve from a traditional phone system to a unified communications platform," Ballmer said. "Systems integration services from Nortel mean customers can deploy these capabilities knowing they have a trusted and expert voice provider to rely on. "
The Toronto-based networking and communications company said it has an aggressive plan to derive significant service revenue from the partnership. It projects more than $1 billion in new revenue through 2009 from professional services, voice products and applications, and data pull-through in the enterprise.
When asked if most service and product revenue will go to Nortel, Ballmer said there will be plenty of opportunities in the small- and midsize business market for traditional Microsoft partners, as well as for integrators focused on its unified communications platform.
"We want our partner channel to engage. Nortel will try to touch the global 1000, but there are hundreds of thousands of businesses. And the only way to do that is through a strong [systems integrator] channel and from the broad channel that we court," he said. Ken Winell, CEO of ExpertCollab, a Florham Park, N.J.-based Microsoft partner, said he sees new opportunities for unified communications platform partners. "The Nortel-Microsoft alliance is interesting. Nortel is a formidable force in telephony and will bring the expertise around VoIP and integration into the unified stack that Microsoft can leverage," he said.
"I am certainly hopeful that the partner channel strategy of the alliance is focused on two distinct paths," Winell said. "The first will be telephony and PBX expertise, which would be supplied through Nortel. The second would be custom integration solutions on top of the core Microsoft servers and technologies, which could be supplied through partners."
Ballmer said there will be service opportunities for all Microsoft partners but hinted that it will be Nortel's decision who sells those products. Nortel has a small but loyal VAR channel.
"We will drive the creation of a channel, and for a lot of partners, and for those that attended the [Microsoft] worldwide partner conference last week, this will be a natural step forward in new services they can offer to their customers," Ballmer said.
Microsoft and Nortel plan to develop solutions that span the enterprise, mobility and carrier line solutions. To that end, Nortel will develop enterprise contact center applications, advanced telephony functions, mobility solutions and a data networking infrastructure for Microsoft's unified communications software and Windows platform.
Last week at its partner conference, Microsoft emphasized that VARs would have choices to make about whether to support the Redmond, Wash., software giant in new markets such as security, Software-as-a-Service and unified communications.
On the communications front, Microsoft is working on a basic certification for its unified communications platform, but advanced certifications will be required through Nortel to sell advanced solutions and modules that plug into Office Communications Server, said Zig Serafin, general manager for Microsoft's unified communications group.
Industry observers say Nortel will help bring advanced telephony functions--as many as 400 new options--to the Microsoft platform, which currently offers only rudimentary SIP-based features. Microsoft and Nortel also will collaborate on telephony and VoIP services in Microsoft's iWorker suite, including Office applications and Dynamics applications.
Analyst Sara Radicati of The Radicati Group said she expects the convergence of the telephone and business software--an idea Microsoft has discussed for more than a decade--to require a new sales and channel strategy.
"When they talk about a joint channel, I see that to mean that they will put together sales teams that possess both the voice telecom knowledge, on the Nortel side, and the enterprise data knowledge on Microsoft's side," Radicati said. "One of the big stumbling blocks to the uptake of unified communications to date is that it needs to be sold to both the telecom/voice side as well as to the IT and data side of the organization. This requires a sales and support staff that can speak to both sides and solve integration issues that may arise."
Radicati also expects Microsoft to sign similar partnerships with other communications firms over the next 12 to 18 months.
Ed Pimental, CTO and co-founder of AgileCo, an Atlanta solution provider, said the Microsoft-Nortel deal won't necessarily hurt Cisco Systems, Siemens and those companies' channel partners.
"Both Microsoft and Nortel will still have to prove that this partnership can be monetized," Pimental said. "The spoils will go to those that can deliver not just unified communication but also contextual-aware services that provide trust, preference, privacy and presence."
JENNIFER HAGENDORF FOLLETT contributed to this story.