An Extreme deal for VoIP

Switch maker Extreme Networks announced a deal Tuesday with Internet Protocol phone manufacturer Avaya to develop and sell products jointly. Large U.S. businesses are their first target.

While not limiting themselves to one part of the world, both companies will focus initially on corporations in the United States, where Avaya has a strong market share among Fortune 500 companies, Extreme Networks Chief Executive Gordon L. Stitt said during a conference call. That promises to stiffen competition for Cisco Systems, Nortel Networks and other equipment makers that are staking a claim in that region, he added.

The coupling is another example of how makers of switches used to direct and manage computer network traffic are increasing their focus on voice over Internet Protocol (VoIP) telephone equipment, which uses the Internet rather than a privately owned phone network.

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Cisco Systems and Nortel Networks have also spent significant cash developing Internet Protocol phones that complement their switches.

They hope to cash in on companies that are turning to VoIP to merge their once separate telephone and data networks, with the idea that operating just one network instead of two will save money in the long run. Deals such as the one announced Tuesday create "a dialog between network and applications makers?that will help the industry move forward," Stitt said.

"This relationship will accelerate the adoption of convergence," Avaya group vice president Mike Thurk said in a statement.

In a deal sweetener, Avaya will get shares of Extreme stock valued at $20 million. "I wouldn't call it bribery," Stitt said in response to an analyst's question about the payment. "The important component here is the joint development agreement, where there is significant benefit from Extreme's perspective."