Nortel's Liquidation Could Cripple UC Relationship with Microsoft
Nortel's liquidation of its assets could possibly gut the 3-year-old unified communications partnership the company has with Microsoft.
Wed, June 24, 2009
Network World — Nortel's liquidation of its assets could possibly gut the 3-year-old unified communications partnership the company has with Microsoft.
Nortel had Little Choice but to Liquidate, Analysts Say
The pair forged a relationship in 2006 that resulted in what they called the Innovative Communications Alliance (ICA), a plan to jointly develop, sell and roll out UC and VoIP technology to corporate customers over a four-year period.
Nortel was bringing to the table its telecom background, middleware product set and install base while Microsoft was taking a software approach to voice anchored by its Office Communications Server (OCS).
The partnership, which has already delivered some tangible product integrations, is slated to end in 2010 and current developments may signal its permanent demise.
"Bankruptcy does not mean going out of business, but Nortel is fighting for its life," Zeus Kerravala, an analyst with the Yankee Group, told Network World in January.
Nortel's asset liquidation could eliminate from the partnership Nortel's telecom products, including its IP-PBX platform, the Nortel engineers working with Microsoft on jointly developed products, and Nortel Global Services, the consulting arm that provides glue for ICA.
The consequences of such a collapse can be summed up in comments by Nortel CEO Mike Zafirovski at the 2006 partnership unveiling when he called the deal an opportunity to create $1 billion in revenue.
That prediction has not come to fruition, and by 2008 Nortel was reporting a $3.4 million loss and company officials were unwilling to discuss the Microsoft partnership in terms of earnings.
By January 2009, Microsoft would only say it was waiting for more information before it could evaluate the fallout from Nortel's bankruptcy filing. "We are not in the position to assess the impact of the ICA until we understand Nortel's plans," a company spokesman said at the time.
(Microsoft had not responded to a request for comment on the latest Nortel developments by the time this story was posted.)
But Nortel's plans are clear now with the company liquidating and hoping to restructure under Chapter 11.Gone could be its enterprise business, which Zafirovski has said is on the block. Canada's Globe and Mail is reporting that
Nortel is close to selling the division to Avaya for $500 million. That deal would include the UC equipment that is critical to ICA.
Given the overlap in product sets between the two competitors and the fact that Microsoft has an existing UC partnership with Avaya, such a deal could spell the end of integration work or joint development under ICA. Those efforts might shift to Avaya products depending on what, if any, Nortel products survive the acquisition.
