Nortel Networks and Microsoft are expanding their existing partnership to sell jointly developed products to telephone companies that serve business clients.

The products will allow telephone companies to provide the unified service to business customers. With the combined communications services, small and medium-sized business clients won't have to buy, install and manage their own networks to have access.

As Richard Lowe, Nortel's president of carrier networks, points out, "If you're small, you really don't want to be tied up to all of the capital expenditure investment, nor do you really want to manage this yourself."

According to the companies, the jointly developed products will also benefit phone companies, allowing them to extract more value from the existing networks.

"I'm quite optimistic that, as part of our overall carrier (voice over Internet protocol) strategy, this is going to play very well," Lowe said.

Microsoft and Nortel announced in July that they would work together on making telephone service, e-mail, instant messaging, video conferencing and other communications services simpler and more convenient to use by linking office phones and computers.