Nortel Brings Unified Communications In-House

In its quest to sell small to midsized businesses (SMB) on unified communications (UC) services, Nortel Networks announced today it is acquiring VoIP and UC software maker Pingtel for an undisclosed amount.

Nortel, which for more than a year had been licensing Pingtel’s open source technology for its own products, said the purchase would give it greater UC software capabilities as well as improve future product development.

“This will give us greater flexibility in our go-to-market strategy and extend communications capabilities on our open system platform,” David Downing, Nortel’s (NYSE: NT) general manager for enterprise and SMB communications systems, told

Much of Pingtel’s software is already built into Nortel’s Software Communication System 500, a SMB offering that Downing said is receiving strong market traction.

The acquisition, which has Nortel buying Pingtel from the smaller firm’s parent company, BlueSocket, illustrates a growing trend as vendors strive to push out seamless and easy-to-manage UC solutions — but often don’t have the capacity to develop needed software elements in-house.

The move also represents a continued drive by UC vendors to grab share in the SMB market, a segment one analyst said has been largely ignored.

“The SMB market has been underserved by UC providers and these players are now realizing there is a bucket of money to be made,” Mike Karp, an analyst at Enterprise Management Associates, told

“It’s a green field of opportunity and what Nortel has done is exactly what other players are doing, as most don’t have IP technology development expertise, and it’s more efficient to pull in new technology,” Karp said.

The news also marks the latest in Nortel’s UC efforts. In April, the company expanded a UC partnership with IBM aimed at the SMB market, in a move to challenge competitors such as Microsoft (NASDAQ: MSFT).

Nortel said the Pingtel acquisition would enhance its current offerings for smaller businesses as well as the upcoming SS450, slated for launch in October. The SS450 provides UC capabilities using older telephony systems, and is aimed at companies that can’t afford to replace or revamp their existing legacy telephone setups.

“The ‘450 is a different product as it’s for the hybrid market — the enterprise customer that can’t reinvent its phone systems but wants UC capabilities,” Downing said.

Downing said all Pingtel employees would be integrated into Nortel.

The acquisition also advances Nortel’s efforts to support open source UC development, Downing said.

“Pingtel’s been a big contributor to the open source effort, contributing over 300 individual systems, which align with our vision of the promise UC has,” Downing said.

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