IBM, Nortel Announce Joint Research Deal

IBM (NYSE: IBM) and Nortel this morning announced a joint research agreement in the telecommunications market that will focus first on a new class of blade servers.

The Nortel-IBM Joint Development Center in Research Triangle Park, N.C., -- which a spokesman called a "bellwether" -- will make use of IBM's consultants, technology assets, R&D and engineers to develop new products with Nortel.

IBM would not say how many employees will work in the center, revealing only that the companies have an open-ended agreement that could grow and change if the partnership flourishes.

Product development will focus on end-to-end broadband, voice over IP, multimedia services and wireless broadband for Nortel's telecom customers.

'Collaborative Innovation'

"What this really is about is a new model for how to do collaborative innovation," George Bailey, an IBM Business Consulting Services partner, told TechNewsWorld. "In today's business climate, if you go it on your own, you're going to fail."

Bailey said there were no details to reveal about the blade server project, but that IBM believes the collaboration will create new capabilities that will differentiate the blades.

"I can say that the next generation will have dramatically better cost performance," he said.

The researchers will combine IBM's server technology and Nortel's carrier-grade communications expertise into the new blade.

Less Money, More Ideas

The companies said the joint effort will reduce R&D costs and bring new ideas to the table.

"What people are finding is that traditional markets are being commoditized and that they have to codify new spaces to make their margins," Bailey said. "That comes from developing new insight and new technology."

Nortel spends more than US$1.5 billion a year on research and is struggling to cut costs. The company announced a 3.6 percent decline in year-over-year sales earlier this month and an 88 percent drop in profits.

The company has been battling an accounting scandal in which 12 senior executives were forced to pay back $8.6 million in bonuses they received based on false profit reporting.