Nortel Goes Virtual With DiamondWare Buy

Nortel said the acquisition of Mesa, Ariz.-based DiamondWare, which makes technology that claims to bring life-like sound to virtual Web and voice communications, helps the Ontario-based networking vendor drive the transformation of communications that enable users to collaborate in interactive and immersive ways.

"A key goal of Nortel has always been to use technology to replicate the richness of a real-world communications experience," Nortel's CTO John Roese said in a statement. "The acquisition of DiamondWare strengthens Nortel's position in the converging telecommunications and IT landscapes and gives us another building block to create the ultimate communications experience for our customers."

DiamondWare's technology uses wideband, stereo capability and custom spatial positioning that can deliver real-time interactions in 3D virtual worlds and meetings, online gaming systems and multimedia applications. It has been deployed in gaming environments and in U.S. military tactical intercom systems. It has also been used by several carriers and equipment manufacturers.

For example, if several users in a virtual game or meeting are speaking simultaneously, DiamondWare technology lets each individual hear participants in relation to how far away they are in the virtual space. Participants can also engage in private conversations. The goal is for these virtual meetings to closely mimic real-world experiences.

DiamondWare CEO Keith Weiner said the 3D voice technology will give Nortel users a more natural and immersive communications experience whether they use it for traditional telephony, conferencing, mobile unified communications or Web 2.0 virtual world environments.

Nortel said it will leverage DiamondWare's technology across both its carrier and enterprise portfolios to enhance its multimedia, video conferencing and VoIP solutions. It will also be used in several new advanced research products as part of Nortel's Incubation Program, an initiative that focuses a certain amount of R&D on investment in new products in new spaces that Nortel has said don't necessarily fall into the focus of their their current business.

One project that is part of the Incubation Program is "web.alive," a 3D Web networking solution that lets users collaborate, socialize and conduct business in virtual environments with life-like visual and audio features within their own corporate networks.

Under the terms of the agreement, Nortel will buy all outstanding shares of DiamondWare. The costs of the acquisition, including employee retention and transaction, were roughly $7 million in cash plus an additional $3 million to DiamondWare security holders based on achievement of certain milestones over the next 40 months.

The DiamondWare buy comes just over a week after Nortel acquired the Pingtel business from wireless and mobility vendor Bluesocket in a move that brings open-source VoIP to Nortel's portfolio. Pingtel develops sipXecs, an open-source IP-PBX platform based on Linux.