As part of the deal, IBM will offer computer and software technology while Cisco will provide Internet Protocol products and expertise, according to an article published over the weekend by Nihon Keizai Shimbun, a Japanese newspaper. Specifically, Cisco will provide IP telephones as well as IP switching and routing gear that will be used in the network infrastructure.
The two companies expect sales of the new service to generate roughly US$8.6 billion in the next few years. They also hope to win about 30 percent of Japan's IP telephony market, according to the newspaper.
IP telephony has become a hot market recently as many companies put their voice traffic over the same infrastructure they use to deliver IP data services. Cisco has said that by migrating to a voice over IP infrastructure, companies can cut telecommunications costs by about 50 percent and can improve productivity.
Cisco has been growing its IP telephony business over the past couple of years, installing gear in more than 14,000 organizations worldwide, according to its own estimates. Recently, it announced that it had shipped its 3 millionth IP telephone to Adobe Systems, a significant milestone for Cisco.
In August 2002, Cisco announced that it had shipped 1 million IP phones, an accomplishment that took the company three and a half years to achieve. One year later, Cisco announced that it reached the 2 million mark, and in April of this year, its shipments increased to 3 million IP phones overall. The company said that it has been displacing more than 6,000 traditional business phones every day.
IBM and Cisco have a long-standing partnership in several other technology areas. Last month, they announced a deal to more tightly integrate Cisco switches and networking gear with IBM's management software, server and service offerings. Cisco plans to introduce a Gigabit Ethernet switch module that can fit into an IBM BladeCenter server rack sometime this month.
In February, the companies announced they were planning on integrating security technology to provide better protection against viruses and worms.
IBM did not return calls seeking comment, and Cisco was unavailable for comment.
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