At a press conference here, Microsoft CEO Steve Ballmer and Nortel CEO Mike Zafirovski also gave customers and analysts a glimpse of their future product road map.

The partnership between Nortel, one of the largest makers of telephone infrastructure equipment in the world, and software giant Microsoft is designed to help corporate customers transition their old telephone networks to networks based on the Internet Protocol. When the partnership was announced, the companies promised to integrate the Nortel telephony technology with Microsoft's Office software, and to build new products that incorporate both companies' technologies.

On Wednesday, they introduced the Unified Messaging solution, which is expected to ship in the second quarter of 2007. It ties together Nortel's Communication Server 1000 and Microsoft's Exchange Server 2007 using the IP telephony standard session initiation protocol, or SIP. The tight integration should simplify installation and maintenance of the messaging application, the executives said.

In the fourth quarter, the companies will integrate Nortel's Multimedia Conferencing product with Microsoft Office Communicator 2007 to deliver a single client experience for voice, instant messaging, presence, and audio and video conferencing. This means users could check the online status of recipients in an Outlook e-mail. And instead of sending an e-mail response, they could initiate an IM conversation or video conference using the same client.

"The first phase of integration is about pulling together communications to form a fully integrated client," Ballmer said. "And eventually we'll go to transformation, where we'll fully integrate the back-end systems for collaboration and communications management."

Integration, integration, integration The first product that will actually integrate Microsoft and Nortel technology to form a single piece of hardware is the Unified Communication Branch. It will go to market in the fourth quarter of this year. Because the new device incorporates technology from Nortel and Microsoft, it eliminates the need for corporate customers to deploy a separate gateway or routing product to link the communications network with the Microsoft Office applications.

John Roese, Nortel's chief technology officer, said in an interview that the Microsoft relationship has already helped his company increase sales of its telephony products, which for the past few years have placed third in terms of overall market share.

"It's good to have a large partner like Microsoft working with us," he said. "It gives comfort to the large companies. If you look at our combined R&D it's probably larger than anyone in the industry, so it's definitely been a significant selling point."

The companies claim they've already signed up dozens of customers, including multinational oil company Royal Dutch Shell.

Phillip Hagemann, chief information officer for Fred Weber, a midsize construction company based near St. Louis, said that a year ago his company was set to deploy an IP telephony solution from Cisco. But he reconsidered the decision when he heard that Nortel was working closely with Microsoft.

"Our users were already used to the Microsoft e-mail and messaging clients," he said in an interview at the New York event. "Cisco has its own client software, and it would have been a big change. Cisco says you can integrate their solution with Microsoft, but it still would have been a headache for my IT guys. And like they say, 'Time is money.'"

Ultimately, Microsoft and Nortel expect an even deeper level of integration for their products.

"Presence information could show up in the comments on an Excel spreadsheet," Ballmer said. "That's how deeply we think we need to get with the integration."

Whether the Microsoft/Nortel alliance will be able to deliver on this promise is still unknown. Much of the deep integration that executives talked about Wednesday isn't expected to hit the market until 2009.