Microsoft Chasing Smaller Providers

Microsoft is starting to go after the smaller Telcos in the U.S. It has licensed its software to be used with Calix access systems as well as Alcatel access systems. Calix's primary market is the Tier 2 and Tier 3 telcos in the U.S. The two companies are in a trial together but have announced where.

Since Microsft has (or had) relationships with Bell Canada, ATT, and Verizon, except for Qwest there are not too many large opportunities left. The only place for Microsoft to go in North America is to these small telcos. There are two or three of them that are fairly large, but even these are much smaller than ATT, Qwest, and Verizon. They are also much more fragmented, since they tend to be collections of small, discontiguous operations.

180Squared told me that its strategy is to provide applications and other services that will supplement Microsoft in these markets. This approach will require Microsoft to move closer to a shrink wrap approach and will require different approaches to product support.

Nortel and Calix Reform Alliance

Nortel and Calix announced a joint marketing agreement that gives Nortel access to Calix's broadband access products. The two companies had a previous agreement for three years that resulted in providing 2,300 Calix systems with 400,000 interfaces to 26 telcos. The previous agreement was terminated last year when Nortel announced plans to form an alliance with Huawei. Now that the Huawei agreement has fallen through, Nortel is coming back to Calix.

Nortel exited the broadband access business more than five years ago. It has been working to find a way back in and into the IPTV market ever since. Its relationship with Calix has been a viable way to serve the small U.S. telcos. It should continue to work.