Nortel, Microsoft offer hosted unified communications (sans partners)

Nortel and Microsoft are pushing hosted unified communications into small and medium-sized businesses, but where's the partner play?

Nortel and Microsoft launched a hosted unified communications (UC) offering for small and medium-sized businesses (SMBs) this week, but channel partners won't have any part of the deal for now.

Nortel also announced a semi-hosted UC offering with IBM this week, similar to one previously launched with Microsoft.

The Microsoft-Nortel hosted unifed communications offering is the third extension of a strategic partnership started between the companies in 2006. The two companies set out to combine Nortel's IP voice and multimedia applications with Microsoft's enterprise desktop and server software, making it all interoperable.

The first incarnation was a premise-based offering that enabled partners to become cross-certified between Nortel and Microsoft and offer arguably one of the most competitive UC packages in the market. Many in the industry said the coupling enabled the companies to squarely take on Cisco Systems, a market leader.

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The second phase of the partnership was a hybrid-hosted scenario in which Microsoft's Office Communications Server (OCS) and other enterprise applications were on premise, but Nortel's IP telephony applications were hosted. Partners still held their role in the enterprise on that deal.

In this latest offering, which was introduced at the NXTcomm08 show in Las Vegas this week, the entire package is hosted by telephony carriers and can be sold directly to SMBs that can now pick and choose which applications they want. Because of that, smaller companies don't need the IT staff and expertise to maintain the system. More importantly, they spend less to buy in. But this deal cuts out the partners entirely.

"Now everything has moved off premises and is in the carrier environment," said Sita Lowman, Nortel's leader of converged core and application marketing for carrier networks. "The end user experience is very similar." That means all of the same applications, including presence awareness, follow-me calls, messaging and multiple other collaborative applications, are accessible to small businesses.

Behind the scenes there is a Nortel Communications Server 2000, an IP multimedia switch and the Microsoft Solution for Hosted Messaging and Collaboration Version 4.5, which combines versions of OCS 2007 and Microsoft Exchange Server 2007.

For telephony carriers, this is the obvious choice for a "second wave of applications" to deploy once they've gone IP in the network, Lowman said.

But as with all hosted applications, hosted unified communications could pose a threat or at least a challenge to partners selling the on-premise equipment for the very same Nortel-Microsoft solution. Lowman said she doesn't see a conflict, since most partners sell the more expensive premise-based UC package to larger enterprises with more money and ability to invest than SMBs. In addition, she expects that partners will still be able to sell on-premise phones and network access technologies to smaller companies using this technology.

But it is a possibility that the hosted model will eventually be available to larger enterprises, and when that happens, the picture for partners could change. Lowman said, however, that if the hosted model for larger enterprises does materialize, it will be a long way down the line.

David Nahabedian, co-founder of Nortel and Microsoft partner Integration Partners Corp., said the hosted model is not a problem for his company because it is aimed at SMBs. Integration Partners, based in Lexington, Mass., plays in the mid- to large-tier space. If Nortel and Microsoft should push the hosted UC solution into the larger enterprise, that could present an issue for some partners, but it could also be a boon.

"Nothing is stopping them from going down that road," Nahabedian said of Nortel pushing the hosted model into the larger enterprise. "But if Nortel does something that strengthens them as a company, we're fine with that. Maybe it causes us to compete with them for a company or two, but the benefit would outweigh it."

Nortel's hybrid carrier-hosted UC offering with IBM is still partially premise-based. This one mixes Nortel IP telephony voice and multimedia applications with IBM's Lotus Notes and Lotus Sametime. The IBM piece of the scenario will be on-premise, while Nortel's voice and multimedia applications will be carrier-hosted. IBM and Nortel will provide integration services and network management support on this offering, also limiting partner involvement.

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