Nortel Teams With Microsoft For VoIP, Services

Nortel Networks is rallying its channel to push beyond the boundaries of its traditional service provider focus into both the SMB segment and larger enterprises.

As part of his efforts to turn around the struggling telecommunications firm, President and CEO Mike Zafirovski has pledged to "change the trajectory" of Nortel's enterprise business, which also encompasses its SMB efforts. It's a promise the vendor is attempting to deliver through new partnerships in distribution and unified communications.

This week, Nortel plans to expand relationships with distributors Ingram Micro, Synnex and Westcon Group to broaden its reach into small and midsize businesses. The move follows the launch last month of a new portfolio of SMB networking products to accompany its SMB VoIP offerings.

The accelerated SMB push will also be fueled by a deep, four-year strategic alliance between Nortel and Microsoft in the unified communications space. That pact, revealed last week, covers joint product integration, research and development, and sales and marketing.

"We have said that we want to and must change the trajectory of our enterprise business, and this alliance is a dramatic proof point that we have committed to the enterprise market and remain determined to both grow it and to profit from it," Zafirovski said during a conference call to discuss the Nortel-Microsoft deal. The partnership is expected to bring Nortel $1 billion in new revenue through 2009 from professional services, voice products and applications, and pull-through of data products, he said.On the distribution front, Nortel is tapping Ingram Micro, Synnex and Westcon to step up SMB partner recruitment, training and marketing, said Eric Schoch, vice president of North American marketing for channels and distribution at Nortel, Brampton, Ontario.

Nortel is committing to a fourfold increase in the personnel resources dedicated to the three distributors and, in return, they are bulking up on staff to support Nortel.

Fremont, Calif.-based Synnex, for example, has hired a dedicated team of sales, engineering and marketing staff to support the Nortel SMB push, while Ingram Micro, Santa Ana, Calif., is hiring two market development managers and beefing up on training and technical support personnel.

"Traditionally, Nortel's channel has not targeted [the SMB space], so the main objectives are two-fold: education of the existing partner base on how to and what to sell to the SMB market, as well as identifying new partners in the space and educating them on the benefits of the Nortel solution," said Anthony Daley, executive vice president for the Americas at Westcon, Tarrytown, N.Y.

Some solution providers said Nortel's expanded SMB portfolio opens the door for them to push converged voice and data solutions to the lower end of the SMB market. But perhaps even greater opportunities for the channel will come from the Nortel/Microsoft alliance, they said."Effective immediately, this gives us a message to help customers make a buying decision," said Stuart Chandler, president and CEO of Optivor Technologies, a Nortel partner in Jessup, Md. The pact with Microsoft will give Optivor customers a tremendous confidence boost and help push those on the fence toward Nortel purchases, he said.

The services revenue expected to come to the channel from the alliance will also be tremendous as partners help build solutions that tie together networking, voice, messaging and mobility, Chandler said. "It will give us an opportunity to engage as a systems integrator because there will be more applications," he said.

Under the wide-ranging Innovative Communications Alliance announced last week, Microsoft and Nortel said they will collaborate on R&D to converge IP voice, networking and communications with software.

Ken Winell, CEO of ExpertCollab, a Florham Park, N.J.-based Microsoft partner, said he sees new opportunities for partners that sell unified communications platforms.

"The Nortel-Microsoft alliance is interesting. Nortel is a formidable force in telephony and will bring the expertise around VoIP and integration into the unified stack that Microsoft can leverage," he said.Steve Ballmer, CEO of Redmond, Wash.-based Microsoft, said there will be plenty of opportunities in the SMB market for traditional Microsoft partners, as well as for integrators focused on its unified communications platform.

"We want our partner channel to engage. Nortel will try to touch the Global 1000, but there are hundreds of thousands of businesses. And the only way to do that is through a strong [systems integrator] channel and from the broad channel that we court," he said.

As part of the alliance, Nortel is building a systems integration arm focused on unified communications, which will offer services both to customers and through channel partners.