Rebar is on the IT staff at Fujifilm Sericol USA in Kansas City, Kan. He said Nortel's alliance with Microsoft is "not a step backwards for Nortel," but added, "It remains to be seen how it will pan out."

Asked why Microsoft didn't purchase Nortel outright with its ample cash, Ballmer said, "Seriously, Nortel is a great company that has a very different expertise than Microsoft has. We are not experts at enterprise networking, optical transmission, voice solutions and many things Nortel has done." Ballmer said the two companies now have to figure out how "one plus one equals three."

Zeus Kerravala, an analyst at Yankee Group Research Inc. in Boston, said the alliance's impact on IT shops is that "it helps deliver communications integrated into the desktop faster than any one vendor trying to do it on their own." Kerravala said the alliance could increase Microsoft's lock on the office applications market, which might upset some IT managers.

Bill Lesieur, an analyst at Technology Business Research Inc. in Hampton, N.H., said the new Nortel-Microsoft alliance "will be pitted against the well-established Cisco-IBM duo in delivering IP telephony and unified communications."

Ballmer said Microsoft is already competing with IBM and Cisco in many areas while at times also cooperating with them. "Customers will benefit from our energy and Nortel's energy and what we bring together," Ballmer said.