Nortel breaks down industry barriers

The barriers between the telecommunications industry and the PC industry continue to fall as companies--looking for the next cash cow--continue to play integrated voice and data cards to win hands in the emerging market for so-called convergence technologies.

The reason telecommunications equipment giant Nortel Networks has garnered attention from the likes of Intel, Microsoft, and Hewlett-Packard is simple, according to HP's chief Lewis Platt.

"It's where the action is," he said during a press conference in San Jose today.

Given the $250 billion estimate for sales of telecom equipment by the year 2000, you don't have to delve much deeper for a reason why three giants of the PC industry would choose to team up with a stodgy provider of telecommunications equipment and software for phone companies.

The genesis of Nortel's move can be found in last year's merger with data player Bay Networks, a ringing endorsement for an integrated network future.

Nortel today showed off new and expanded relationships with Microsoft, Intel, and HP in order to extend the use of its telecom technology. HP essentially will be a middleman in an effort to create new hardware and software for businesses that want to create a unified messaging system as well as Internet protocol-based services.

The result will be a telecom-focused system based on Intel's chips and Microsoft's Windows NT operating system, according to the companies, bringing Nortel into the PC world. HP executives said they hope to have the technology ready in the second half of this year.

Making moves
The move is only the latest in a series of initiatives between the telecom equipment industry and systems players as both camps attempt to tackle the needs for differentiated services among ever-expanding service providers and phone carriers. Nortel competitor Lucent Technologies recently made a unified messaging play with Unix systems giant Sun Microsystems.

For Nortel, the alliance allows the firm to shed much of its proprietary baggage, relying on the ubiquitous use of Intel hardware and Microsoft software to give it new opportunities.

"It's not your father's Nortel," said F. William Conner, executive vice president at the company. "It doesn't feel like the same company, and it isn't."

For Intel, HP, and Microsoft, stronger ties with Nortel may mean a larger role for each in the booming networking business. The trio may also help prop up a Canadian firm that has not been known in the past as a mover or a shaker.

"In Nortel, you have a company that wants to respond to market opportunities with increasing speed," noted Geoff Nyheim, director of global consulting at Microsoft. "If [telecom companies] all go at their slow, steady pace, they aren't going to change anything."

Underscoring the alliance-intensive environment in the networking industry is a relationship HP has established with Nortel rival Cisco Systems.

"We're here because this is the team that got together to do this," said Platt at today's event. "To date, no one else has."

HP may have to walk a fine line to make both companies happy, particularly since Cisco is counting on HP for important voice-oriented software to make its data equipment more applicable for telecommunications networks.

Executives from the computing giant were quick to explain the differences between the work they are planning to do with Nortel and their partnership with Cisco. While the Nortel deal will revolve around making existing telecom tools work better on PC-based systems, the Cisco deal revolves around IP-based technologies and service provider requirements, according to Dan Abouav, director of strategic programs for HP's telecom business unit.

"I don't think there's anything we're doing here that conflicts with what we're doing with Cisco," Abouav said.