Microsoft, Nortel form alliance

Video: Ballmer speaks on Microsoft-Nortel alliance
Companies to push unified-communications products

Together, the companies plan to transition traditional business phone systems into software that integrates Microsoft communications software with Nortel Internet telephony hardware and software.

As part of the deal, the companies will enter a four-year alliance. Nortel will be Microsoft's strategic partner as its pushes its unified-communications products. Nortel will also become the systems integration partner for the advanced unified-communications solution.

The companies plan to jointly develop products for large companies, the mobile market and wireline phone carriers. They also plan to cross-license their communications intellectual property.

Microsoft has been pushing the idea of unified communications--enabling people to integrate all their business communications applications: telephony, instant messaging, e-mail and others--into a single platform. With a central platform, people can choose who contacts them, and when. They can also determine over which type of communications they get contacted--whether it be e-mail, phone or IM.

Microsoft has already announced some unified-communications products. Earlier this year, it combined its Exchange unit with the real-time communications group that handles its Live Communications Server for instant messaging and presence management--software that detects whether you are online. The company has also said the next version of the Exchange e-mail server will be able to handle voice mail and allow workers to check e-mail by phone.

Nortel, which has been selling voice equipment to large phone companies for years, also sells voice over Internet Protocol, or VoIP, software and hardware to large businesses.