Few additional details were announced, and the amount of investment by both companies was not disclosed. However, Nortel will send potentially more than 100 of its developers to Redmond, Wash., to work with Microsoft developers.

Their first task will be further integration between the Nortel Communication Server 1000 and Microsoft Office communications products, said Steve Slattery, president of enterprise solutions at Nortel. That effort will evolve into a portfolio that includes a voice server appliance and various terminals and devices to complete an Office communications suite of products, he said.

Anoop Gupta, vice president of Microsoft's unified communications group, said several products rolling out in the second quarter of 2007 will include integrated Nortel elements. Those products, spelled out at a news conference last month, include Office Communications Server 2007 and a related Communications client.

Reaction by analysts and Nortel customers to the alliance was mostly positive.

"This represents two powerhouses coming together, and I don't think there's too much of a downside to it," said Victor Bohnert, executive director of the International Nortel Networks Users Association (INNUA) in Chicago. He said the alliance with Microsoft helps Nortel re-establish its reputation as a market leader in the wake of a series of financial restatements the company has had to make in the past three years.