Nortel Bullish On VoIP

With all the focus on video, IP-TV and Google (GOOG)-YouTube acquisition, VoIP has gone from belle of the ball to shrinking violet. The reality, however, is VoIP is still very much alive and well. All you have to do is look at Vonage’s (VG) growth, the fact Skype has now had its software downloaded more than 500 million times, and North American cable companies are aggressively pushing into the telephone business.

This is proving to be good news for Avaya (AV) and Nortel (NT), which have taken a head’s down approach to VoIP. At the VoiceCon conference Avaya CEO Louis D’Ambrosio and Nortel CEO Mike Zafirovski made bullish comments about the VoIP business. There is a particular focus on software - Avaya is spending 70% of its R&D budget on software, for example.

Nortel, meanwhile, is also focused on developing software for the enterprise market. Zafirovski said 80% of Nortel’s 12,000 engineers and researchers are software programmers. He said a high-profile agreement with Microsoft is a key element of Nortel’s goal to become more software-centric. “Though the image of Nortel may be as a hardware company,” he said, “we’re making software solutions to drive [business innovation].”