Nortel, Hewlett-Packard Team Up on Internet Services

H-P and Nortel are stepping into the fast-growing applications service provider market to quickly deliver a bundle of applications available for rental over the Internet.
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Nortel Networks

(NT)

announced Monday that it would team with

Hewlett-Packard

(HWP)

to offer the network and applications that should make it easier for Internet service providers to deliver a bundle of business application over the Internet.

Shares of Nortel rose 2 3/8, or 3%, to 90 5/8. Hewlett-Packard fell 1 1/8, or 1%, to 107 7/8 in midday trading. (Nortel closed up 11/16, or 1%, to 88 15/16, while H-P finished down 3 1/8, or 3%, to 105 7/8.)

Terms of the deal were not disclosed.

The goal of the combined technologies is to make the Internet the medium for obtaining business applications "anywhere, anytime," Nortel said.

"Not to have a deal like this would be a big deal," said Richard Chu, an analyst at

SG Cowen

who rates H-P a strong buy. His firm has not underwritten any recent offerings from either company.

H-P and Nortel are stepping into the fast-growing applications service provider market to quickly deliver a bundle of applications available for rental over the Internet.

Dataquest

, a technology research firm, estimates that that market will have $23 billion in sales by 2003.

"You have people coming from the computer space aligning with people that are traditionally in the carrier space," Chu said. "This is interesting in light of the

Sun

(SUNW) - Get Report

/

Lucent

(LU)

alliance from Dec. 1. They want to deploy their applications as rapidly as possible so that businesses can tap into applications as they need them."

Computer network manufacturer Sun Microsystems forged an alliance with network equipment-maker Lucent to create the infrastructure for new Internet-based business applications.

Nortel, which makes and sells telephone networks and services data for carriers, will provide the network over which H-P's mail messaging software and a number of other applications will be available for rental. Other applications include products to manage commerce from

Intershop

and Internet-based travel and expense management software from

Concur Technologies

(CNQR)

.

Nortel, together with H-P,

Software.com

(SWCM)

, Concur Technologies and Intershop, will be "turbo-charging the market for e-business solutions," according to Richard Caruso, president of application service providers market segment, service providers and carrier group at Nortel.