Microsoft, Nortel in web phone alliance

Mumbai: Software giant Microsoft Corp has entered into a communications alliance with Nortel Networks Corp. of Canada to promote its software for internet telephony.

Nortel said it expects to reap more than $1 billion in revenue from the new business that will develop software for internet calling, instant messaging and voice and video conferences. The alliance aims at wooing companies away from traditional business phone systems into software, thereby allowing cost cuts, over a four-year period.

"We believe we can capture well beyond $1 billion in new revenue, ramping up with increased momentum through 2009 via professional services, voice products and applications, as well as data pull-through in the enterprise," Nortel chief executive Mike Zafirovski said in a statement.

Microsoft and Nortel have entered into a four-year alliance to sell software and services to small and medium-sized businesses, large corporations, mobile phone and landline service providers. The web-based phone market is currently assessed at $4 billion a year.

Microsoft and Nortel said that under the deal, which can be extended, they would license some of each other's intellectual property and deploy the other's technologies in their corporate networks. Microsoft said the software, which will be updated with new versions in 2007, connects with its Office programmes and may help companies save at least 50 per cent off their communications costs.

The partnership would also help Nortel compete with Cisco Systems, the world's largest maker of computer networking equipment as also competitors Avaya Inc and Alcatel SA.