Microsoft’s Telecom Plans
Filed Under (Blogs) by Mark Evans on 05-04-2007
Alec Saunders has a fascinating post looking at how Microsoft has been moving into the telecom market - PBX, VoIP, etc. - and how the software giant’s aggressive strategy could impact major players such as Nortel, Cisco and Nokia.
http://www.marketwatch.com/News/Story/Story.aspx?guid=%7B9D898B31%2DA37F%2D4D7E%2DA2DF%2DA83C8A201AB7%7D&source=blq%2Fyhoo&dist=yhoo&siteid=yhoo
BERKELEY, Calif. (MarketWatch) — Microsoft and Nortel decided to team up for a stupendous idea this week, at least if you read all the fawning press:
“Nortel Networks Corp. and Microsoft Corp. have forged an alliance to transform business communications” — Calgary Sun
“Nortel expects more than $1 billion in sales from the new business, which will develop software to provide Internet calling, instant messaging and voice and video conferences, the company said. Microsoft said it expected the business to reach several billion dollars in coming years.” — Los Angeles Times
“Microsoft made its boldest move yet.” — San Jose Mercury News
“Microsoft Chief Executive Steve Ballmer, predicted that within 10 years all business communications will be Web-based, meanings hundreds of millions of people will change how they communicate.” — USA Today
Using that last fluff comment from Ballmer was the topper since there was not one balanced remark in any of these news accounts such as, “Hey, are you telling me that the mobile phone is dead and won’t be used for business at all? Puh-leeeze!”
If you go to the trade publications, the commentary is a lot different than this I can assure you. It’s mostly along the lines of “What? Who are these guys kidding?”
Nobody seemed to notice or care that this was actually a re-run of a similar 1999 deal.And whatever came of that joint initiative around similar telecom dreams back in March of 1999 with Microsoft. Did these companies think we wouldn’t notice that they’ve already waltzed us around the posies once before?
One of the comments made by Nortel CEO Mike Zafirovski indicates that Nortel is anxious to get into the “software as services” business. There’s one new term right there. But exactly where did this desire come from?
I knew there was a serious problem with marijuana in Canada. I just knew it.
So in trying to figure this out I get the sense that Microsoft wants Nortel to teach it about communications (especially voice over Internet Protocol, VoIP) and Nortel wants Microsoft to teach it about software as services. In other words both companies want to get out of their respective businesses. Part of the lure here seems to be Microsoft’s much touted “Unified communications platform.” This is yet another one of those half-baked Microsoft Sounds good on paper fix all problems ideas that eventually drifts off into an obscure nook, sputtering. Nobody is even sure what it is — as usual.
Let’s be honest here: Insofar as communications is concerned, specifically, Microsoft is a laggard and Nortel is too. Two laggards do not make a juggernaut.
For a moment I thought that part of this scheme was to exploit some recently unearthed patent, but neither company would need the other if this were the case. So I’ve concluded that they’ve got nothing.
The comments by Ballmer that the whole of business communication is going to be web-centric are reason enough to know this entire initiative is going nowhere. The notion that the web can reliably handle “all” business communications is a laugh.
The Net goes down, it’s filled with spam, you have to compete with “free” and established VoIP web-systems such as Skype, Yahoo, Gizmo and a dozen others.
More importantly the phone companies dominate the network infrastructures and they are not going to put up with much more of what they term “bypass.” Bypass means circumventing the phone companies for this sort of communication.
In other words there will be no billions and billions of revenue as a result of this alliance. It’s too little too late and, more importantly, without substance. End of Story
I watched the ballmer/zafirovski interview on bloomberg when it first came out. Zafirowski reminded me of frado in the godfather.
Ms has deep pockets. based on widoze and especialliy the vista hype, I don’t think they have the first clue about feature behaviours and interactions. Nortel still has some talented people,(losing them fast) some decent software and is losing money.
I don’t think either company has the vision that some of their competitors and customers have. It will be interesting to see if this non exclusive agreement goes anywhere.
This is another area in which Nortel is late to the party. Both Nortel and Microsoft know they can’t win alone against Cisco so they were forced to team up. The enemy of my enemy is my friend. It would help if Nortel had a better enterprise data networking portfolio. The issue is it just creates more beaureaucracy when two large companies who still behave as if they were fat, dumb and happy try to plan and execute joint development projects-not to mention who to call when something goes wrong with a Nortel/Microsoft system you’ve deployed. From a historical perspective, the last 7 years or so Nortel and Microsoft have had many grand plans and strategies but both companies fail when it comes to execution. Microsoft still relies on its legacy for most of its revenue while the same is true of Nortel. This is a clearly of case of trying to create public perception and value where is very little.
Wow,
Some of you folks talk about the “last 7 years” hey wake up you people.. Nortel and Microsoft have figured out how to truly change the landscape of Telecom. No longer Nortel, Avaya Cisco…. VoIP. Soon it’s Microsoft vs… those other little guys.. Come on get real there is a reason Nortel and MS hooked up. Great synergy and Nortel has more Voice expertise then ayone.
In the long term there is Nortel and Cisco and Avaya will be a distant third, Avaya has no totally converged Voice Data Optical apps switching story, They do voice…..
Data Portfolio, More performance lower cost in ALL areas. Nortel just sucks at marketing. Give them time. It’s tough to fight the 800 LB gorilla, Mind sets in the NY marketplace is “Hey Why not go with Cisco, I mean IOS upgrades happenall the time”… Ask a Nortel Customer when was the least time they upgraded thier 8600 operating systems software… (5 years Plus)
I love this game!
Hegamonster: Not sure who needs to wake up here. 1) the NT MSFT agreement is non exclusive, meaning MSFT can drop NT like a hot rock at any time. 2) long term there is cisco period. No one else comes close. 3) Avaya does indeed have a unified platform and more unified applications than nortel in the SMB space. (For example, nortel needs a external wireless handoff to their platform)
We agree that nortel sucks a marketing. Can we agree that the management sucks too?
There was a saying in the 70s that “no IT manager ever got fired for choosing IBM”. Cisco is today’s equivalent of IBM in the 70s. That is true for cisco today. I agree from a technical standpoint nortel equipment is probably slightly superior to cisco, and their heritage is that the equipment is less of an opex burden.