The Innovative Communications Alliance will result in new products for businesses and carriers as early as 2007 based on an exchange of intellectual property between the companies, Microsoft's software expertise and Nortel's communications savvy, the CEOs of the two companies said in a teleconference.

"The communications industry is at a real inflection point," Microsoft CEO Steve Ballmer said. "In a few years, all of us will use next-generation devices for voice and data. The combination of service and support offerings from Microsoft and Nortel will enable enterprise customers to have unified communications."

Nortel CEO Mike Zafirovski said a single platform tying together the expertise of both companies "is a giant win for our customer." He said customers will see the cost of operating communications networks drop and won't have to rip and replace networks to achieve unified communications improvements.

Over more than three years, the alliance will mean about US$1 billion in added revenue to Nortel for services and products, Zafirovski said. Ballmer would not discuss how much in extra revenue Microsoft expects, but he said hundreds of millions of people will get unified communications products and services in the next decade.

"If we can't make that into a gigantic opportunity for Microsoft or Nortel, shame on us," Ballmer said. "I know it's a huge opportunity. ... The key is to make it happen."