Microsoft’s communications plunge stirs up VoIP

Redmond's plans will change the IP Telephony landscape

Microsoft’s head-first rush to claim a spot in the IP telephony and unified communications race follows a familiar pattern for the company in that it is long on vision and short on deliverables, say observers.

The path is littered with many challenges, as Microsoft seeks to exorcise past failures with telephony by not only providing front-end collaboration clients but also back-end IP-based infrastructure built on the Session Initiation Protocol (SIP). This puts it in line to do battle with telecom equipment vendors.

“They have jumped in the market head-first here,” says Tom Valovic, an analyst with IDC. “Our research shows that the IP-PBX vendors have been concerned about Microsoft as a competitor for some time now. And, because of Microsoft’s dominance on the desktop, they have reason to be concerned.”

Valovic says Microsoft will have to balance the telephony partnerships it does have because those will be key when it comes to future success.

Analysts say Microsoft faces other major challenges too, including shipping on time all the pieces it has promised over the next 12 months, solving the reliability and security issues that have plagued the Windows infrastructure, and convincing users to turn their voice infrastructure over to Microsoft.

The software giant has lined up a year-long roadmap for creating a single real-time communications and collaboration platform that includes a software-based voice infrastructure aimed at, eventually, replacing IP-based voice hardware.

The company has used partnerships in the past with the likes of Nortel and others to outline a unified communications infrastructure, but this time around Microsoft is taking on the whole pie with a platform that combines -email, instant messaging, voice and video into a single communications infrastructure available from within any desktop or network application.

Microsoft plans to hold on to its stake in the desktop market by tying it all to Office 2007 and its family of desktop clients. But it is in the realm of Office’s server products, notably next year’s planned shipment of Office Communications Server (OCS) 2007, where Microsoft is entering the IP telephony domain and catching the competitive eye of telecom providers like Cisco, experts say.

OCS 2007, formerly called Live Communications Server, is a SIP-based server that can route and switch IP-based voice traffic, as well as instant messaging and web conferencing sessions. With Microsoft’s client technology front-ending the server, the need for an IP-PBX is radically diminished.

“We do think over the next few years there will be a dramatic transformation with IP-PBX,” says Jeff Raikes, president of Microsoft’s business division. Speaking at a recent unveiling of the company’s unified communication strategy, he said, “The way in which that is going to play out is to build on the infrastructure that companies have in place but then give them new capabilities ... [it could be] true that [customers] may think of themselves as not actually purchasing a PBX but adding a kind of software platform — an enterprise communications software platform — to their server and network infrastructure.”

Analysts say the message is clearly: here we come.

“Microsoft will position Commun-i-cations Server 2007 as an alternative to organisations considering migrating their TDM environments to IP alternatives from Cisco, Nortel, Avaya and others,” says Irwin Lazar, an analyst with the Burton Group.

Lazar says the advantage the incumbents have is that their gear is sold on an appliance with the software pre-configured, optimised and locked down for security.

“The enterprise has, historically, preferred the appliance model, but it is not out of the realm of reality to think there is going to be an OCS appliance offered by one of Microsoft’s partners.”

Lazar says Microsoft faces three big challenges: time, reputation and cross-platform support.

“We see large enterprise clients already making their final decisions on IP telephony with Cisco, Nortel, Avaya and others. Microsoft comes into the game a little late.”

Microsoft doesn’t plan to ship the bulk of its platform, including OCS and its Communicator client and soft phone integration, until the second quarter of 2007.

And Lazar says users will rigorously evaluate any plans to turn their voice infrastructure over to Microsoft.

“The other thing is cross-platform support,” he says. “Can they ensure the same user experience across Linux, Apple or other platforms?”

Those questions will take some time to answer, but others say it is clear that an impending battle is coming, especially with Cisco believing that the network layer and not the application layer is where IP telephony functions should live.

“Microsoft and Cisco are very clearly on a collision course when it comes to enterprise communications,” says Brian Riggs, a senior analyst with Current Analysis.

“This is going to cause enterprises and small business to stop and think about how they migrate to IP telephony.”

Riggs says this would foster a wait-and-see attitude as users watch for what Microsoft actually delivers, and what the company’s roadmap reveals for the next five years.

Riggs says Microsoft is well positioned to step in as users move from hardware-based PBXs to software-based servers. But, he says, “Microsoft is still probably a long way from delivering all the reliability, failover, remote-office connectivity and hundreds of calling features that PBX and IP PBX vendors have. Cisco, Avaya and Nortel are going to be Microsoft partners for the years to come”.

“I do not believe that Microsoft has proved that Office Communications Server can provide a reliable and flexible voice platform on its own for enterprises. But will it be providing it in three to five years? That’s the question”.

For its part, Cisco doesn’t see a fight so much as a continuation of a relationship that at times has been contentious.

“We also believe that, for [unified communications] to work, it must require a Microsoft and a Cisco, and others, working together,” Cisco CEO John Chambers said in a talk with journalists at Cisco’s recent user conference.

Chambers says customers can expect to see more overlap in Microsoft and Cisco technology efforts, as each vendor looks to expand its reach in communications, security and applications.

“Microsoft will do things in security. We will do things in security,” Chambers says.

“Together we can make a system that’s much more effective than we could separately; the same thing will be true with unified communications over time.”

Third-party partners are hearing from customers that they don’t plan to make it a one-horse decision as they pursue relief from having to deploy separate voicemail, call centre, messaging, email and voice technologies.

Nick Fera, the CEO of Parlano, has been a Microsoft partner for two years. The company develops software called MindAlign that provides persistent group messaging for Microsoft Live Communications Server. The technology lets users retain and integrate discussions that happen over real-time communications, be it instant messaging web conferencing.

“We have been asked by many customers to take a look at various unified communication platforms, because making a decision like this is monumental for these companies. So, we have been asked to look at Cisco, Nortel, Avaya and others to see how we would work with different vendors should our customers choose their products.”

It is the kind of pragmatic approach that corporate users are going to have to take during this transition, experts say.

“You have to be careful in saying it’s all or none,” when it comes to Microsoft’s or Cisco’s unified communications technology, says Bern Elliot, vice president of research at Gartner.

“Cisco requires Microsoft Exchange servers as the email part of its unified messaging offerings, while Microsoft needs the LAN, WAN and QoS infrastructure from Cisco to make its real-time communications work. So, they’re coming from different areas. And, in their respective areas, they work very well together,” Elliot says.

He believes that Cisco and Microsoft need each other and that corporate users also want both of them to work together.

He says the transformation to unified communications will also force other relationships, especially tighter cooperation among technology groups, much like when PBX and LAN groups started to come together in the past.

“It’s taken ten years for enterprises to figure out how to get their telecom and data communications people to work together,” Elliot says.

“Most of them have succeeded. Now they have to do the same thing in getting the application people working with the network and telecom groups.”

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