Microsoft, the putative 800-pound gorilla in the VoIP and unified communications (UC) market, made a big splash two weeks ago, announcing new Office Communications server and client products, and an innovative piece of video conferencing hardware.
Chairman Bill Gates outlined what could be a market-altering new software-centric approach to unified communications, but also re-hashed some disputable claims for return on investment (ROI) from VoIP and UC deployments.
Now that the dust has settled a bit, what does the Microsoft initiative really mean?
To help us make sense of it, we polled a couple of analysts who have been tracking Microsoft's course through this market. Zeus Kerravala is senior vice president of enterprise infrastructure at Yankee Group. Jayanth Angl is a research analyst at Info-Tech Research Group.
It looks to us like another example of Microsoft muscling in on an existing market and pretending to discover it. Or offering to save it from itself. IP telephony, after all, has been part of the enterprise telecom market for a decade, unified communications for at least five years.
UC is about integrating all forms of digital communicationsvoice, video, e-mail, IM, Web conferencingon the same IP network, and providing 'presence' information to help users figure out which mode is best to use at any given moment.
At the core of the Microsoft announcement was the introduction of Office Communications Server (OCS) 2007, a much-heralded new version that adds features for on-premise Web conferencing, group instant messaging, and IP voice and video. OCS 2007 also improves presence management and federation functions that enable integration of telecom systems at different sites and from different vendors.
An all-new UC desktop client, Office Communicator 2007, lets users see presence information about colleagues and launches virtually any mode of communications to reach themincluding IP voicefrom their PCs. This will be an advance over using traditional desktop phones with their often opaque user interfaces, Gates said.
An updated version of Office Live Meeting, Microsoft's conferencing service, and RoundTable, a new conferencing phone with a camera that provides panoramic views of meeting participants, rounded out the product announcements.
Is there any net new technology here, we wondered, anything that others haven't already brought to market in one form or another? Not really, says Kerravala.
"But the way they're going about the market is a little different. They're positioning unified communications to be a capability rather than a product. What you buy from Avaya or Cisco today is a product. You install it, your users run it. What Microsoft wants is for that capability to become an embedded component of every application."
And it's not just a question of integrating UC into Microsoft products. The company also showed an example of integrating Microsoft's presence engine into Duet, the software it developed two years ago with ERP vendor SAP, to let users access SAP information through Office clients.
Angl agrees there is ultimately no new capability being introduced, but notes, "What Microsoft has provided with Outlook Communicator is a platform to tie together a lot of these elements for the first time so you don't have a mish-mash of different point solutions. This is going to make things easier for end users."
While there has been lots of interest in UC, so far there has not been wide-scale adoption, Kerravala says. He believes the Microsoft approach could change that. Having UC functions built into programs that users are already familiar with, such as Office and Outlook, will make it easier to get them to use it, he says.
And Microsoft's market clout will make a difference, too. Estimates of Exchange's share of the enterprise e-mail market range up to 70 percent. Kerravala doesn't think the real gains in market uptake will come right away, but there will be a short-term impact, he predicts.
"I think it'll get a lot of peopleprimarily [enterprise] Exchange and desktop [PC] managers that weren't really using this technologyto use it."
Adds Angle, "I don't think you can underestimate the importance of that coverage [of the market] that Microsoft has with Exchange and Office. The fact that this product ties directly into those products is a big advantage."
Another strength of the Microsoft offering, he says, is that it would not, in most cases, require customers to change the telecom equipment they already use. Most telephony hardware vendors are committing to integration with the Microsoft software, including through partnerships, such as those with Nortel, Mitel and Ericsson, announced at the OCS 2007 event.
Microsoft's software-centric approach to VoIP and UC that will see users launching voice calls as well as IM sessions, e-mail, and Web conferences using the OC clientpossibly using a dumb USB handsetis not a Microsoft exclusive, Angle points out.
"It's something all the other vendors in this space have recognized, including IBM and Cisco," he says. "They're all putting more focus on the PC client now."
Angl and Kerravala were both skeptical about Microsoft's claims of significant quantifiable benefits from deploying VoIP and UCas much as 25 to 30 percent savings over using "traditional communications technologies," Gates said.
Some of that is savings that result from switching to IP telephony and eliminating virtually all of the labor costs associated with moving, adding and changing user extensions. Those benefits are probably indisputable, but were first noted a decade ago and have been delivered consistently by IP PBX vendors.
Kerravala calls it "old-school thinking about VoIP," and adds, "I was disappointed in Bill's presentation."
Some of the claimed benefits also come from the purported efficiencies of using presence and UC functions, but those benefits are very much in dispute"always very difficult to calculate," as Kerravala says.
It might take a user three minutes to track down and communicate with somebody using UC where it took five minutes before. "But that's a pretty soft value proposition," he says.
Kerravala believes the real gains to be made are from using unified communications capabilities to create new and better work processes. But in the current UC market, that doesn't happen very often.
"For the most part, when I ask people what they do with their VoIP and unified communications systems, it's nothing differentit's making calls," he says. "So if it's nothing different, there's probably no added benefit."
Because the mainly small business case studies presented by Microsoft are necessarily built around customers using beta product for a relatively short time, it's difficult to tell "where the real savings come from and if in fact they do materialize," Angl says.
He believes, the biggest short-term cost benefits will come from customers using the conferencing functions built into the new Microsoft products rather than using external pay-as-you-go conference bridge services.
If the impact of the Microsoft initiative on customers is uncertain, the impact on the marketplace and on competitors is less so, though perhaps hard to gauge in much detail.
Both Microsoft and Cisco have made noises about ensuring their products are interoperablethey have little choice since customers demand it. But Angl and Kerravala agree a battle of Titans is brewing.
"It becomes much more competitive [between Microsoft and Cisco] before it becomes cooperative," Kerravala says. He means that both companies will fight harder now to get exclusive control of an account before giving in to customer demand for cooperation.
IBM is also making moves and girding for action, Angl notes. It more tightly integrated its Lotus Sametime presence, IM, and Web conferencing software with Notes and Domino messaging products to create a solution that can compete with Microsoft. And it forged an interoperability partnership with Cisco.
Those most at risk, though, appear to be the traditional PBX vendors, including Microsoft's supposed partners, Nortel, Mitel and Ericsson.
One thing to come out of the initiative, Angl says, is that these vendors now understand they must partner with Microsoft if they want to hang on to their customers. And they will probably have to cede much of the software side of their businesses.
Many if not most already had UC and presence products, such as Nortel's CallPilot software. Those products may be unsellable going forward.
"A lot of customers I talk to don't think they should invest in [CallPilot] because they think it's going to be all Microsoft Exchange integration eventually anyway," Kerravala says.
In fact, he says he's heard from his network that Microsoft may ultimately be aiming to muscle Nortel out and simply grab its customer base.
These companies desperately need to find ways to add value to Office Communications Server if they want to stay in the software side of the business, Kerravala says. The alternative is to become mere box sellers, and the day when that was a viable option is "rapidly coming to an end," he says.
The waves will continue to spread from our gorilla's big cannonball dive into the VoIP and unified communications waters. Some competitors may find themselves swamped.
But if the Microsoft initiative means companies are more likely to start adopting and reaping the highly touted benefits of unified communications and IP telephony, their users, Angl and Kerravala say, may be the big winners in the end.