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Tech Industry

Heavy hitters work the wires

A group of PC and communications firms are working on a new platform designed to carry telephony, data, and Internet traffic for large businesses.

A group of PC and communications heavyweights is expected to announce Monday that the companies will build a new platform designed to carry telephony, data, and Internet traffic for large businesses, sources said.

The companies, including Microsoft, Intel, Hewlett-Packard, and Nortel Networks, will come together Monday at the Technology Museum of Innovation in San Jose, California, to discuss the platform initiative. In addition, Nortel and HP will unveil specific new products, according to sources familiar with the deal.

Intel and Microsoft will provide their core products--the new Pentium III chip and the Windows NT operating system--and ongoing technological expertise.

Intel chief executive Craig Barrett, HP chief executive Lew Platt, and Nortel chief John Roth are slated to attend the event, sources said. Microsoft's Bill Gates will appear via live broadcast.

Although further details remain sketchy at this time, the move will mark an increased effort by the companies to snag a larger portion of the lucrative telecommunications equipment market.

Intel and Microsoft may own the desktop but now the "Wintel" partners want a piece of the growing communications industry.

Market research firm International Data Corporation pegs the U.S. telecommunications market--including local and long distance voice, wireless, and data services--as a $261.9 billion market this year. Separately, the worldwide telecommunications equipment market is expected to total $250 billion in 2000, according to investment bank Salomon Smith Barney.

As consumer PC prices continue to fall, the PC industry leaders would like to get into as many new markets as possible--especially the booming telecommunications industry where voice, video, and data lines are blurring, alliances are being struck, and new networks are being built on a daily basis.

"Intel is clearly looking to get into new markets, and I think telecom is certainly one," said Kelly Spang, a semiconductor analyst at Technology Business Research.

A closer relationship
Until recently Nortel has been using more expensive proprietary systems in its communications products--frequently Motorola chips, according to a Nortel spokesman.

Earlier this week Nortel announced that it will broaden its use of Intel's chips in its call center systems, which are automated systems that route calls to the appropriate person.

Intel's new Pentium III chip was made with multimedia capabilities in mind, and voice recognition is one of the chip's better tricks.

In the past, the Canadian company used proprietary chips for its Symposium Call Center Server, CallPilot unified messaging, and Symposium OPEN IVR (Interactive Voice Response) systems, but is now using Intel chips. The company also announced that other products would debut with Intel chips later this year.

Intel hopes to prove its chips are a lower-cost, reliable alternative for high-volume businesses.

Spang said Intel has made strides in its networking business and the acquisitions of Shiva and Level One continues the company's drive toward the data and telecommunications industries.

"There's sort of a parallel push by Intel to get more into voice recognition, telecom, basically more applications that eat network bandwidth and that requires more processing power, hence the Pentium III," she said.

Cutting into Unix
But the "Wintel" alliance, long the dominant platform on the consumer desktop and in small- to mid-sized business settings, has had difficulty penetrating higher profit margin markets such as telecommunications. By joining together, Intel and Microsoft hope to steal market share from the Unix vendors.

"They've had a very difficult time getting into the telecommunications industry," said Amir Ahari, a senior analyst who covers servers at market research firm International Data Corporation. "The telecos have been a dominant Unix house."

Many telecommunications companies have huge investments in Unix-based systems and some have fears about the scalability and robustness of the Windows NT-Intel chip offering for heavy-duty, or "mission critical" applications.

"Now they have a telco supplier entering the fray. In the past you wouldn't have seen that," Ahari said. "I think they're trying to prove that NT and Intel is capable of scaling and handling a heavy volume business like the telecommunications industry."