"There are plenty of competitors that you just don't talk to, or things get acrimonious," Ballmer said, as the two spoke on a discussion panel together on Monday. "That's not where we want to go with Cisco," he added, saying that Microsoft was seeking "respectful competition" with Cisco.

Setting the whole announcement in context, Cisco CEO John Chambers spoke during a BusinessWeek interview of "the second productivity wave of the Internet," adding:

"It will be any device, any content. You're going to operate in whatever format you're most comfortable. It is going to require industry leaders working together where appropriate."

"There's more overlap on our product line than ever before. Let's face it, you're probably talking to the two greatest pretenders to replace today's PBX infrastructure with Voice over IP-type infrastructure."

"It is so important to be crisp on your road map of where you're going to work together, and where you're going to compete; to be crisp on your interoperability and what you're going to do and not do. That's a model no one has mastered. Now, if we master it well, our customers win and I think we could win big-time. We do not underestimate the degree of difficulty with it."