ITWire

For Microsoft to achieve its goal "to put people at the centre of communications through a single identity across all modes and integrate communication into people's everyday work processes," as set out in the announcement of its push into unified communications on 26 June,  the office telephony system will be key. So an intimate relationship with one of the market leaders in the telephony world makes a lot of sense.

Why Nortel? Well for starters, it would have been very receptive. It has been struggling to find a new direction for months. Alcatel would likely not be: it's in the throes of merging with Lucent, and there'd likely be cultural issues with the French company Similarly with Japan's NEC.

An alliance was announced with Siemens as part of Microsoft's initial unified communications announcement, but it does not have the scope and depth of that with Nortel. There's likely a very good reason for that: Siemens Enterprise business unit is up for sale in the wake of its telecoms carrier business being tipped into a joint venture with that of Nokia.

Telephone switching system technology is an esoteric and specialised business in which even the mighty Cisco is a relative upstart and the giant Microsoft a non-starter. The market leaders in the field of enterprise telephone systems (aka PABX or key systems) remain to this day those companies like Nortel that can trace their origins back half a century and more into the analogue systems era.

According to Infonetics, in February 2006: In the overall PBX/KTS systems market, Nortel, Avaya, Siemens, Alcatel, and NEC (in that order) lead in worldwide 2005 line shipments." Cisco fares much better in North America , according to Infonetics, "Nortel leads the IP PBX market in line shipments for 2005, followed by Avaya and Cisco, but it's a very close race among all three."

According to Frost & Sullivan: "The enterprise telephony market has a few key participants, namely 3Com, Alcatel, Avaya, Cisco, Ericsson, NEC, Nortel, Mitel and Siemens. Alcatel and Siemens lead the market in Europe; Avaya, Nortel, and Cisco in North America; Siemens and Nortel in Latin America; and NEC, Avaya and Nortel in Asia Pacific. Among them, these vendors account for a little more than three quarters of the global market."

More importantly there is still a massive installed based of legacy (ie non IP) office telephony systems and none of these are from Cisco, they are all from the likes of Nortel, Alcatel and Avaya.

Ovum notes that these are prime targets for transformation to unified communications. And "Nortel brings the integration expertise to migrate large enterprises from legacy voice infrastructure to IP...a vital component of the mix as few enterprises want to 'rip and replace" in order to move to the new technology."

Co-incident with the Microsoft alliance announcement Nortel announced a revamped enterprise market and channel strategy that, if successful will better position it to take advantage of this transformation.

A potential development that could strengthen the alliance considerably would be Nortel acquiring Siemens enterprise comms business. Nortel has been tipped as a possible buyer, as has Avaya. According to Frost & Sullivan "Siemens has a large installed base and is likely to generate more than $5 billion in cumulative revenues by 2011... Overall, Siemens' installed base of traditional PBXs represents an excellent target market for replacement over the next few years for the company that can manage to tap into it."