Nortel and IBM to deliver Internet telephony

Nortel Networks and IBM Corp. teamed up Wednesday in what an IBM executive calls a “multi-million dollar deal” to deliver voice-over IP products and services to enterprise businesses.

The two companies introduced a combined suite of hardware, software and services that will provide a converged voice and data network. The plan is to include IBM’s WebSphere e-business infrastructure software and DB2 database software into Nortel Networks Symposium Contact Center solutions portfolio.

It’s these kinds of deals that lead to the 75 per cent growth in WebSphere last quarter, said Hershel Harris, director of the IBM Canada Ltd.’s Toronto lab and vice-president of WebSphere development worldwide.

“These are big numbers,” he said from his Toronto office, adding that much of the development on both IBM and Nortel’s part has been taking place in Canadian centres.

According to officials, the deal will enable desktop video conferencing; desktop message management for phones, faxes and e-mail; and plug-and-play software phones as portable as laptop computers, applications typically geared to the enterprise business and independent software vendors (ISV).

“It will be 2002 when the products we are talking about will be available but the benefits start today,” Harris said.

“From an IBM point of view, we are targeting the ISVs who are building e-business applications that require the use of data management and Web servers. That’s where our market is going. What Nortel is delivering in this product is general customer relationship management software that is cross industry. You really see a broad range of industry segments there, but ours is the ISV.”

And the larger the customer, the more likely they will use the bundling, said Eric Ross, president of enterprise solutions at Nortel Networks in Raleigh, N.C.

“And those with more locations are the ones that may be more interested in the arrangement in that trying to find a global service provider is quite difficult,” Ross said. “In other words, it would be primarily the larger set of customers.”

Large customers will have a wider set of options, said Alex Pierson, general manager of voice over IP (VoIP) at Nortel Networks in Belleville, Ont., where Nortel is manufacturing and creating the IP components of the deal.

“There is a lot of breadth to this,” he said. “It covers both the core network side of it, telephony as an application, the messaging platforms and portal solutions and the full breadth of the things we bring to bear on an enterprise.”

Pierson said Nortel will be using IBM server platforms and software products to enable customers to build applications on the Web that integrate both Web presence and telephony.

While Lawrence Surtees, a senior telecom analyst at IDC Canada, agreed that this is a positive arrangement, he said it’s unlikely to have a big impact on either company.

“I don’t see this as a big huge thing, because from IBM’s standpoint, Nortel represents another channel for them and they have been going gangbusters with that for some time,” he said. “It’s important to note that in terms of the competitive landscape, IBM does lots and lots of stuff with Cisco. Now Nortel can turn around and say ‘Look, us too. We do something with IBM.'”

Surtees said he also sees another motive for this partnership.

“Here’s a news release from Nortel that doesn’t have any layoffs in it and no billion dollar losses,” he said. “It is positive for IBM. After all, I assume Nortel still has a sales force amidst the 40,000 job cuts this year. But it’s not a new thing.”

Neither Nortel or IBM would release the financial worth of the partnership, but Ross described the relationship as “significant.”

“Our focus is on end-user solutions and now we don’t have to worry about the underlying server technology because we get it from IBM directly,” he said. “Whatever the numbers are, they will be, and I know I am going to be satisfied with the numbers.”

Surtees added that since both IBM and Nortel are global companies, they don’t really need each other to expand. However, he expects they are going to try and leverage each other’s vertical markets.

“If you are Nortel sales, if IBM’s products in the sphere are hot, you are looking for anything that gives greater value in the eyes of the customer,” he said. “In voice over IP, for the traditional telecom folk, whether they are the equipment supplier or the carrier, 2001 looks like the year that they are dipping their toes in this market.”

IDC Canada in Toronto is at IBM Canada in Markham, Ont., is at Nortel Networks in Brampton, Ont., is at