HP vs. Apple vs. RIM and Microsoft/Cisco Convergence: Battle for the Corporate Phone

Rob Enderle

I first started in tech with a PBX vendor, arguably the most advanced of its time. One of my positions there was as competitive analyst for phones, and I was able to use prototype devices that were vastly more advanced than anything anyone had ever seen.


Since then, I've been in major withdrawal, as these features and phones never made it to most desktops. Most folks are lucky if they can figure out how to do things like conference in a co-worker or transfer a call successfully.


This is a long way of saying the telephony industry doesn't operate at "Internet speeds." In fact, changes still seem to take decades -- or at least did. That is about to change dramatically.


There are two types of convergence going on. The first is being largely driven by Microsoft, which is the only vendor possibly strong enough (and note I said possibly) to drive common standards across the telephony industry for user features. If it weren't for Cisco, I'd lay odds it would fail, but Cisco is also a game-changer representing the greatest threat the legacy PBX vendors have faced since IBM, before it failed in this industry. And, unlike IBM, Cisco isn't learning on the job and has what I believe to be the strongest enterprise VoIP solution in the segment.


The second is the convergence of cell and land-line phones. Northern Telecom tried and failed to do this more than a decade ago, but the technology wasn't ready, and Northern didn't have the breadth to make it work. With the surge on smartphones driven by RIM and Apple, coupled with the capability of HP, which just entered the segment with the strongest enterprise cell-phone line, the next step of converging PBX and cell services is closer than it has ever been.


Microsoft Background:


This is the fourth time Microsoft has made a run at phones. In the early '90s there was a joke phone created by Microsoft Europe that floated around for a while. A consumer phone followed, one that depended on Windows 95 for features and was probably the worst telephone I'd ever seen in my life. After NT came out, a number of small PBX vendors used that platform in an embedded-like form and created what were the most reliable Windows Servers of their time (something that surprised most of us).


This is only to show that Microsoft's experience here tracks back over a decade into both devices and switches, and while the results have been mixed, the company has an established knowledge base.


It's also interesting that Microsoft itself used the cheapest and most limited phone systems in the market for much of its existence, and that likely motivated the company to create a solution that it could use that wasn't so incredibly out-of-date. Sometimes self-interest is the best motivator.


It should be noted that Microsoft is hedging its bets by bringing out its own converged product in the SMB market, where technology change could happen more quickly. This is because systems in that market, called key systems, are even more antiquated than what many PBX enterprises use.



PBX Convergence: Unified Communications


The problem with getting this to work in the past is that the telephony guys and the computer guys seemed similar, but were incredibly far apart. A PBX looks like a server, but it lacks anything approaching the kind of standards that surround servers. It's sold using a razor-blade model where the PBX is the razor and services, peripherals, and phones are the blades. This has created an historic barrier to convergence that has been almost impenetrable because it often seems the people who need to penetrate it won't even acknowledge it exists. Two things were needed: a vendor large enough and powerful enough to drive a solution between vendors and at least one PBX vendor not tied to historic PBX practices. Microsoft is the first and Cisco is the second.


In addition, the PBX vendor had to be big enough to scare the legacy PBX vendors into responding competitively and stepping outside their "not-invented-here" ideology. Cisco is big enough and its success scary enough to make this work.


We finally may have a solution to this mess and a chance to move PBX technology into the current decade. However, this is only one of two trends that are combining to make a big change.


Cell Phone/PBX Convergence


Smartphones have more capabilities than most desk phones and are, in and of themselves, converged devices. They are the most successful converged devices to date, and with the iPhone are aggressively showcasing convergence into multimedia.


If the Microsoft/Cisco path is at the back end, the smartphone is at the front and the cell-phone company to watch is likely HP, which has solid relationships with Microsoft and Cisco and has recently launched its own line of RIM-like smartphones.


RIM has been on fire of late, but it lacks the capability to operate at a true enterprise level, with the breadth of services, the skills in the other side of the converged products and the sheer scale required of a true enterprise vendor. Apple is larger, but it is positioned more as a consumer-level provider and the iPhone, while impressive, is far from a corporate solution.


The current generation cell phone is much more than the laptop equivalent to a desk phone because it increasingly embraces most of what a laptop computer can do. Products like the HTC 7501 are basically little solid-state laptops.


The perfect product may well be a unified platform at the back end tied to a smartphone client in your pocket, and I'm not convinced either side fully grasps this yet. But the only company tied to all parts of this right now is HP, making it and not RIM or Apple, the company to watch. Though, HTC, tied back to Microsoft and rumored to be tied to Google, could make this all very interesting.


Wrapping Up


What we are looking at is likely the most massive change in corporate telephony that has happened since the advent of the PBX decades ago. This change should accelerate sharply through the end of the decade and likely will change dramatically the positions of PBX vendors, cell-phone vendors and related computer (server) platform vendors before it is over. While Cisco, HP and Microsoft are the key companies to initially watch, massive change often is unpredictable and, at this early stage, disruptive entries from other large players and the emergence of upstart companies into major powers (Google) are likely.


By 2015, we should be through this cycle. For most of us, getting there will be an interesting process and, while the result may be worth it, the "interesting" part will likely be very painful for a lot of folks that, right now, don't see this coming.


The good news is in two to three years, this will become obvious to everyone. Bad news is, for many, it may already be too late.

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