IBM, Nortel Are New UC Buddies

Just one month after announcing a $1 billion R&D effort in unified communications (UC), IBM (NYSE: IBM) is expanding its partnership with Nortel Networks (NYSE: NT) to provide UC capabilities to the small and mid-sized business.

The effort comes nine months after the two vendors launched their UC alliance and is the latest shot at market rivals such as Microsoft (NASDAQ: MSFT). All the players are aiming to peel off a slice of the SMB marketplace.

The SMB offering, which pulls Nortel’s IP telephony application into IBM’s generation of Power Systems processors, is aimed at branch offices of 30 to 500 employees.

It features integration with IBM Lotus Sametime, IBM Lotus Notes and Domino on a single IBM platform. Beginning this month, the Nortel Software Communication System will be available on System i, and on Power Systems later in this quarter.

IBM declined to provide specific pricing, stating only that it would be sold on a per-seat basis.

The news carries a bit of irony. IBM is using the same IP telephony partner that Microsoft is leaning on these days: Nortel. Nortel and Microsoft launched their communications alliance back in 2006, and last month rolled out new unified communications services.

Partnering with such computer titans is a plus for Nortel, but it doesn’t necessarily guarantee IBM or Microsoft market share.

“The good news [for SMBs wanting UC] is that these are two technology powerhouses and you think something good will come out. But both need a strong bag of tricks and toolsets to address the market’s needs,” Mike Karp, senior analyst, storage practice lead, Enterprise Management Associates, told

The combined revenue for SMB converged applications is expected to grow from $526 million in 2006 to $1.83 billion in 2010, according to InfoTech’s 2007 InfoTrack for SMB IP Telephony Market Analysis and Forecast.

“IBM’s strengths are business applications and Nortel hopes to leverage that,” Nora Freedman, senior analyst, enterprise networks for IDC, told

The key to success, at least according to IBM, is understanding the market needs, said Adam Gartenberg, senior offering manager, IBM unified communications and collaboration solutions.

“SMBs need to both improve productivity and become more responsive to customers to stay competitive. Unified communications delivers that capability.”

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