Recently Microsoft and Nortel flooded the press release channels, blogs, news sites, etc with a story about how the two companies are forming a “strategic partnership” to provide a “unified” voice technology platform. Nothing useful or significant will ever come of it. Here’s my take:

Here’s what they have in common:

• Both companies make crappy products and “innovate through acquisitions”.
• Both companies have thrived in the past on making their products extra proprietary. They’re kings of vendor lock-in.

• Both companies have a long history of working together. In fact, Nortel’s “latest and greatest” products all rely heavily on Microsoft software.

  Here’s my predictions:

• This new “partnership” will go nowhere fast. Neither company makes good enough products to make a dent in the voice-over-IP sphere. Especially when the real innovation is going on with open source right now (Asterisk, Freeswitch, Fonality, etc).
• Nortel will continue to lose market share at a rapid pace. In 2003 they owned 21% of the voice market. They currently own 18% and they’re $8.6 billion in debt (they were recently bailed out of bankruptcy by a $2.6 billion loan).
• Loads of existing Nortel customers will jump ship for newer, cheaper products. Mostly because the maintenance/support costs Nortel charges are more expensive than complete drop-in replacement solutions from their competitors (which provide more reliability, interoperability, and functionality).
• Nortel, in a year or two will be facing bankruptcy again thanks to an overpriced and inferior product line that relies heavily on Microsoft products for its unique (and proprietary) features (that no one will use).

• Nortel will be bought by Microsoft at an extreme discount as part of a deal to avoid a chapter 7 bankruptcy. Proving once again that Microsoft’s primary business model is to destroy businesses through “partnerships” and stealing their technology, using their monopoly power to force them out of the market, or just plain old buying them out. I bet the Nortel execs think Microsoft is doing them a favor!