Microsoft/Nortel Committed, but Future Is Cloudy

Microsoft's UC interface Rules

Despite Nortel's troubles, Hettick says it and other telecom vendors need to support Microsoft's UC interface -- Office Communicator.

"The telecom vendors have given up on the GUI interface," Hettick says. "In terms of Microsoft, do they need Nortel? They don't need them so much as they need support from all the IP PBX vendors for integration."

So far, ICA has been fruitful, including 10 ICA products in the market and 1,100 joint ICA customers, according to Nortel officials.

The pair also has opened up collaboration centers, technology centers with live ICA demonstrations. And they have established ICA demonstration centers around the world.

But beyond this Microsoft doesn't want to peer into the future.

"Our relationship with Nortel is strong and customer interest in our joint solutions remains high," says Craig Schuman, director of business development and strategy for the UC group at Microsoft. Schuman cites new customers such as Telefonica Moviles Argentina, Nueva EPS and Conagra.

"Nortel remains a strategic partner for us in the UC space. Past that, we can't comment on any future business discussions."

Nortel officials say that ICA is servicing customers as intended by offering product integrations to support UC.

"We are committed to ICA," says Ruchi Prasad, vice president and general manager of ICA for Nortel. "We have a four-year relationship with Microsoft and we have made a tremendous amount of progress."

Prasad says Nortel has put its investment into three areas: integration, investment protection for users, and transformation.

"The industry is at a critical point, but our focus is on customer value. We are on track," he says.

But future development at Nortel will be challenged after the company said this week it will cut spending on R&D by 9% to $377 million.

The cuts will affect the company's transformation into software and voice applications given what Zafirovski said last year at VoiceCon that the majority of the company's R&D is focused on software -- with 75% to 80% of development dollars going to writing code, rather than developing circuit boards, line cards and handsets.

"I think some people under estimate Microsoft in voice," the Yankee Group's Kerravala says. "I know they are a new vendor, but this is the market moving to software, the ICA is temporary relationship.

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